Industrial Production: Q3 Deceleration But Overall Still Strong

Bottom Line: IP was in-line with expectations in September . While year-over-year gains remain strong, there has been a modest deceleration over the last six months. Production gains at both the headline and ex-tech and auto level have slowed looking at 3- and 6-month averages relative to 12-month averages . Industrial production in Q3 increased at an annual rate of 3.1%, moderately slower than in Q2. That said, the pace of gains in the last 3- and 6-months are still above those of 2017, suggesting industrial production is still growing briskly, at pace now just below the cycle highs seen earlier this year. Industrial Production ROSE by 0.28% in September, compared with market expectations for an increase of 0.2%. Output is now 5.2% ABOVE its year ago level. In September, Mining Output ROSE by 0.4%, and is now 13.4% ABOVE its year ago level. Utility Generation was UNCHANGED and is now 5.4% ABOVE its year ago level. Manufacturing Output ROSE by 0.2% and is now 3.5% ABOVE its year ago level. Output in high-tech industries rose by 0.6%. Meanwhile, output in the motor vehicle industry rose by 1.7%. Excluding both the high-tech and motor vehicles industries, industrial output climbed by 0.2%. Capacity Utilization was UNCHANGED at 78.1%, compared with market expectations for a higher increase to 78.2%. Moreover, the prior month was revised from 78.1% to 78.1%. Capacity utilization rate is now 2.4 percentage points above its year ago level and 1.9 percentage points below its long-run (1972–2015) average.