November 15, 2024
Industrial production declined 0.3% in October after falling 0.5% in September. The Fed reported that The Boeing strike reduced production by 0.3% in September and 0.2% in October. The remnants of Hurricanes Helene and Beryl subtracted 0.1% from industrial production in October. Adjusting for these factors eliminates most of the decline in this series. In the past year industrial production has declined 0.3%.
Breaking industrial production down into its three basic categories — manufacturing, mining, and utilities. Manufacturing production fell 0.5% in October after having declined 0.3% in September. In the past year manufacturing output has declined 0.3%.
In the motor vehicle sector production plunged by 3.1% in October after having declined 0.4% in September. In the past year motor vehicle production has risen 4.6%. However, this component is extremely volatile from month to month.
Excluding the motor vehicle sector, manufacturing output declined 0.3% in both September and October.. In the past year it has declined 0.7%.
High tech production rose 0.7% in October after falling 0.2% in September after having jumped 1.9% in August. High tech production has risen 7.5% in the past year. We would suggest that if firms are unable to find an adequate supply of workers, they will turn to technology in an effort to boost production and satisfy the demand for their products. At the same time firms are all experimenting with AI in an effort to figure out how it might help them boost productivity. Thus, we expect high tech production to continue to climb rapidly in the months ahead.
Mining (14%) output fell 1.3% in October after having declined 2.1% in September. Mining has fallen 10.5% in the past year.
Utilities output was rose 0.7% in October after having climbed 0.3% in September. Over the past year utility output has risen 1.5%. This component is extremely volatile from month-to-month as the weather fluctuates.
Capacity utilization in the manufacturing sector declined 0.5% in October to 76.2% after having fallen 0.3% in September. However, the utilization rate has been pulled down by the Boeing strike and the effects of Hurricanes Helene and Beryl. It is currently below the 77.4% level that is generally regarded as effective full capacity utilization, but it should rebound in the next couple of months..
GDP grew 2.8% in the third quarter as firms keep hiring at a relatively rapid pace. We expect GDP to be 2.5% in the fourth quarter.
Stephen Slifer
NumberNomics
Charleston, SC
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