Industrial Production Fell 0.1% in October

The news from the industrial front, contained in the newest revision of Industrial production figures for October, showed a generally steady course. The Federal Reserve Board, which tracks production by U.S. mines, factories and utilities, said industrial production edged down 0.1 percent after increases in August and September that were revised upward. At 146.3 percent of its 1992 average, industrial production in October was 5.2 percent higher than in October 1999.

"Excluding automotive products, the figures were far stronger than I would have expected," notes Tim Rogers, chief economist at Briefing.com. "Removing automobiles from the mix, production was same as September, and that is relatively strong. Autos fell, but that category is very volatile. It was especially encouraging, since the numbers we've seen from the National Association of Purchasing Managers (NAPM) have said that orders are down for last seven months. That may indicate some weakness ahead, but it's heartening to see the hard numbers for industrial output have stayed strong."

Notable falls: The output of consumer goods fell 0.4 percent in October, retracing its September rise. The production of durable consumer goods fell 2.5 percent, in large part because of a drop in the output of automotive products, particularly auto and light truck assemblies. The production of industrial equipment, which had fallen more than 1 percent in September, dropped 0.3 percent further in October. The output of transit equipment decreased 4 percent, a sharp drop largely reflecting declines in motor vehicles. Among materials, the production of durable goods materials slipped 0.2 percent, the first decline in this group in more than a year. The output of consumer parts dropped 4.2 percent, with sizable declines in steel and original equipment motor vehicle parts. 

Notable rises: The production of business equipment moved up 0.3 percent, its smallest increase so far this year. The output of office and computing equipment posted another strong gain, but it was less than the average monthly gain for the first three quarters of the year. The production of equipment parts recorded another large increase; as in previous months, the production of semiconductors posted the strongest gains in this category.

The overall factory operating rate dropped 0.3 percentage point, to 81.2 percent; capacity utilization at primary-processing industries fell 0.2 percentage point, to 81.7 percent, while utilization at advanced-processing industries fell to 81.3 percent.

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