–Utilities -3.4% as ‘Unseasonably Warm Weather’ Cutting Heating
By Joseph Plocek
WASHINGTON (MNI) – U.S. industrial production paused in October,
but that result masks growth.
Output was unchanged after an unrevised 0.2% drop in September,
showing a pause in the Fall. (The median estimate had expected +0.3% for
October production).
This put capacity utilization at 74.8%, still low, and clearly not
inflationary.
But the breakdown is far stronger than the headline: output is
rising and energy use slower. Manufacturing posted a 0.5% increase after
a 0.1% rise in September where steel, machinery, and chemicals output
were revised higher.
Mining slipped 0.1% and utilities fell 3.4%, the latter in a third
drop in a row. These cut production.
The Fed said the recent utilities drops are due to “unseasonably
warm temperatures” that reduced the need for heating.
In manufacturing, jumps in autos, business equipment, and
construction supplies are boosting production. This is good news for the
economy, given the broad gains.
Consumer goods, at unchanged, was the laggard. The Fed said
production of nondurable consumer goods declined 0.2% as the energy
category fell 3.2%.
So overall the production data are stronger than on their face.
–Joe Plocek, jplocek@marketnews.com, Tel. 202-371-2121
**Market News International Washington Bureau: (202)371-2121**
[TOPICS: M$U$$$,MAUDS$]