Federal Reserve: Industrial Production Is Up, Manufacturing Output Is Down

Industrial production rose 0.2 percent, while manufacturing output decreased 0.2 percent in October after having decreased 0.6 percent in September, according to a report released Thursday.

The Industrial Production and Capacity Utilization report released by the Federal Reserve noted that production in August was revised up to show an increase of 0.3 percent.

Manufacturing output declined 0.2 percent in October; excluding motor vehicles and parts, manufacturing output rose 0.1 percent. Mining increased 0.6 percent, while the rate of capacity utilization for total industry rose 0.1 percentage point, to 82.2 percent.

“Manufacturing production slipped by 0.2 percent, while overall industrial production increased 0.2 percent in October due to gains in mining and utilities,” said Daniel J. Meckstroth, Chief Economist for the Manufacturers Alliance/MAPI.   “It is clear that the decline in big-ticket consumer purchases of motor vehicles and housing depressed manufacturing activity.  Motor vehicle production fell 3.9 percent in October, leading to declines in primary metals and plastics and rubber.  Through year-end, domestic automakers plan further reductions to cut inventories of unsold vehicles.  The housing collapse reduced wood products production.  Manufacturing will not have a merry holiday season this year.”

The output of consumer goods declined 0.5 percent in October. The index for durable consumer goods fell 2.6 percent, marking a drop of 4.6 percent in the production of automotive products accounted for most of the decrease.

The index for automotive products held 11.5 percent below its level in 2005. The decrease in automotive products in October was a result of another decrease in light truck assemblies and a strike at a major tire producer. Light truck assemblies stood at an annual rate of 5.6 million units.

The production of defense and space equipment moved up 0.4 percent to a level 5.25 percent higher than its level of a year earlier. Materials output marked an increase of 0.4 percent in October.

Capacity utilization in manufacturing declined 0.3 percent, to 80.7 percent. Mixed results were noted in the durable goods categories. The production of motor vehicles and parts, primary metals, and wood products recorded large drops, while substantial gains were reported in the output of computer and electronic products and of aerospace and miscellaneous transportation equipment. In the non-durable categories, the largest drops were in the indexes for petroleum and coal products, plastics and rubber products, and textile and product mills.

The complete report can be reviewed by clicking here.