US industrial production fell a sharp 0.6% in September
October 16, 2020 by Martin Crutsinger, The Associated Press
WASHINGTON – U.S. industrial production fell 0.6 per cent in September, the weakest showing since spring and a sign that the economy’s recovery from the pandemic recession may be faltering just as confirmed viral infections are resurging in much of the country.
The Federal Reserve reported Friday that industrial production suffered its first decline since a 12.7 per cent drop in April during the spring lockdowns of businesses that paralyzed the economy.
The key category that reflects manufacturing output fell 0.3 per cent. At the same time, mining output, which includes oil and gas exploration, fell 5.6 per cent. Production at utilities rose 1.7 per cent.
Last month’s reading on industrial production followed four straight increases that began in May after sharp declines in March and April. Industrial production has recovered more than half of its spring declines but remains 7.1 per cent below its pre-pandemic level in February.
“Industrial output came in well below expectations, one of the first real signs that the recovery is losing momentum under the weight of the ongoing health crisis and fading support from fiscal relief,” Oxford Economics said in a research note.
Production of motor vehicles and parts fell for a second straight month, dropping four per cent after a 4.3 per cent decline in August, which had followed big increases after auto plants re-opened.
The weaker-than-expected September showing may signal a slowdown in manufacturing, which had been a rare bright spot in the economy, that could hinder overall growth in coming months.
“Rising virus outbreaks that can interrupt activity remain a threat going forward,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.
In September, industry operated at 71.5 per cent of capacity, down from a reading of 77.4 per cent of capacity a year ago.