Industrial production, reflecting the general economic cooldown, slowed in September to 0.2 percent, half the 0.4 percent gain in August, according the Federal Reserve Board, which tracks production by U.S. mines, factories and utilities. The third quarter of 2000 (July-Sept.) experienced the weakest growth in industrial production (a 2.8 percent annual rate) since the first quarter of 1999. In line with the interpretation were figures that showed factories operating at 82.2 percent of their capacity: steady, but below rates that might generate inflation worries at the Fed. The overall index was showing the sort of "cooling off" numbers the Fed has been trying to engineer through this year's series of interest rate hikes.
"I think what you had was a report that showed some stabilization in the 'smokestack' manufacturing sector," observes John Ryding, Senior Economist at Bear Stearns. "Take out the high-tech composite, and manufacturing was flat. That was an improvement over the declines, and what we're seeing is the manufacturing sector pulling out of the inventory overhang that was pushing down on output in previous months.
Also of interest, Ryding said, was that the high-tech manufacturing side "remained robust. We can see is that computer output growth held out pretty strongly, in contrast with reports recently about slowing consumer demand for computer equipment. There seems to be a bit of a disconnect there."
Some of the numbers:
- The output of consumer goods increased 0.8 percent in September after having edged up only 0.1 percent in August.
- After two months of declines, the production of durable consumer goods increased 1.6 percent.
- The production of autos and light trucks rose 1.1 percent in September, but for the third quarter as a whole, assemblies were "noticeably below" the second-quarter rate.
- Auto parts and allied goods jumped 2.1 percent in September, in large part because of strong gains in the production of replacement tires.
- The output of other consumer durables moved up 1.6 percent after having fallen 2.2 percent in August. For the third quarter, the production of other consumer durables fell at an annual rate of 5.1 percent, as the output of appliances weakened.
- The output of business equipment increased 0.3 percent, a slower pace than in any previous month this year.
- The production of industrial equipment, which had increased about 2.9 percent over the July-August period, fell 2 percent.
- The output of transit equipment declined an additional 1.1 percent as a result of a slowing in the assembly of business trucks. In contrast, the production of other equipment jumped 6.8 percent and was led by a sizable increase in the production of farm machinery and equipment.
- The output of information processing equipment advanced 1.1 percent, with another strong gain in office and computing equipment.
- The production of defense and space equipment fell for a second consecutive month, partly because of a strike at a major producer.
- The production of durable goods materials edged up 0.1 percent, as another increase in the production of equipment parts, particularly semiconductors and computer parts, was largely offset by a drop in the production of parts for consumer durables.
Monthly Reports
| Industrial Production Index 1992=100 *revisions possible for previous months |
| June | July | Aug. | Sep. | |
| Total Index | 145.3 | 145.0 | 145.6 | 146.0 |
| Manufacturing | 151.0 | 151.0 | 151.3 | 151.8 |
| Durable | 190.8 | 190.7 | 191.9 | 192.5 |
| Nondurable | 113.2 | 113.3 | 112.9 | 113.2 |
| Utilities | 118.7 | 114.3 | 118.4 | 119.3 |
Market Groups, Losers and Gainers
| Industrial Production *revisions possible for previous months | ||||
| June | July | Aug. | Sep. | |
| Automotive Products | 149.3 | 139.6 | 142.0 | 144.2 |
| Chemical Products | 125.2 | 126.0 | 128.2 | 130.0 |
| Industrial Equipment | 139.8 | 140.9 | 143.8 | 141.0 |
| Basic Metals | 126.3 | 124.2 | 123.7 | 123.9 |
| Semiconductors | 2801.4 | 2923.4 | ||