The 2020 Mid-Year Economic Update_long

Industrial Production Falls 0.6% in September

According to the Industrial Production and Capacity Utilization Report, manufacturing output decreased 0.3% during the month; industrial production was still 6.4% below its pre-pandemic February level.
Industrial production September 2020

Total industrial production fell 0.6% in September, its first decline after four consecutive months of gains, according to the Industrial Production and Capacity Utilization Report, released Friday by the Federal Reserve.

Manufacturing output decreased 0.3% in September and was 6.4% below February’s level.

The output of utilities dropped 5.6 percent, as demand for air conditioning fell by more than usual in September. Mining production increased 1.7% in September; even so, it was 14.8% below a year earlier. At 101.5% of its 2012 average, total industrial production was 7.3% lower in September than it was a year earlier. Capacity utilization for the industrial sector decreased 0.5 percentage point in September to 71.5 percent, a rate that is 8.3 percentage points below its long-run (1972–2019) average but 7.3 percentage points above its low in April.

Most major market groups posted decreases in September. The index for consumer goods fell 1.6 percent, led by declines of more than 4% for automotive products and consumer energy products. The production of business equipment fell 1.2 percent, as a decrease for information processing equipment was partly offset by an increase for transit equipment. The output of defense and space equipment rose 2.1 percent, while the indexes for construction supplies and materials were little changed.

Manufacturing output decreased 0.3% in September, but it advanced at an annual rate of 53.7% in the third quarter. The index for durable manufacturing fell 0.5% in September. Increases for primary metals, for fabricated metal products, and for aerospace and miscellaneous transportation equipment were more than outweighed by decreases elsewhere; most notably, the indexes for computer and electronic products and for motor vehicles and parts fell more than 2 1/2%. The index for nondurables was unchanged, as gains for textiles and product mills, for printing and support, and for chemicals were offset by declines for petroleum and coal products, for apparel and leather, and for paper. The output of other manufacturing (publishing and logging) decreased 0.5%.

The index for utilities moved down 5.6% in September, with a drop in the output of electric utilities more than offsetting an increase for natural gas utilities. Mining was little changed for the third quarter as a whole but increased 1.7% in September, boosted by an increase in oil and gas extraction; in addition, oil and gas well drilling edged up following six consecutive months of declines.

Capacity utilization for manufacturing was 70.5% in September, 10.4 percentage points higher than its trough in April but still 7.7 percentage points below its long-run average. The operating rate for durables decreased 0.4 percentage point to 69.4 percent, and the rate for nondurables was unchanged at 72.9%. Capacity utilization for durables was 15.5 percentage points above its April low but still 5.4 percentage points below its pre-pandemic February level. The rate for nondurables has risen 5.3 percentage points since April but was still 3.5 percentage points below its February level. The operating rate for mining moved up to 77.6% in September, while the rate for utilities fell to 70.4%.

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