Industrial Production: Hard Data Confirms Surveys

Bottom Line: The Federal Reserve's industrial production report for October offered "hard data" to confirm what we have been seeing in the "soft" survey data. Manufacturing activity slowed sharply in the 3rd Quarter and was falling by early in the 4th. Annualized total production in the six months that ended in October was just 0.8%, with the last three months declining slightly. High-value-added industries like tech have seen declines. While autos and aerospace slowed, the sectors continued to see positive growth. Overall, these data confirm the manufacturing sector moved from a tailwind to a headwind for GDP growth in the early part of the 4th Quarter.Industrial Production FELL by 0.11% in October, compared with market expectations for an increase of 0.1%. Moreover, the prior month was revised from 0.4% down to 0.1%. Output is now 3.3% ABOVE its year-ago level.

In October, Mining Output FELL by 0.4%, and is now 6.9% ABOVE its year-ago level. Utility Generation FELL by 1.5% and is now 2.6% ABOVE its year-ago level. Manufacturing Output ROSE by 0.1% and is now 2.4% ABOVE its year-ago level. Output in high-tech industries fell by 0.6%. Meanwhile, output in the motor vehicle industry rose by 2.1%. Excluding both the high-tech and motor vehicles industries, industrial output was unchanged by 0.0%.

Capacity Utilization FELL by 0.2 points to 79.9%, compared with market expectations for a higher increase  to 80.4%.  Moreover, the prior month was revised from 80.3% to 80.1%. The capacity utilization rate is now 1.3 percentage points above its year-ago level and 0.1 percentage points below its long-run average.