Post-Hurricane Industrial Production Back to Growth in September

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U.S. industrial production rose in September. The Federal Reserve has indicated that the economy recovered from storm-induced weakness in August and in the first half of September with a seasonally adjusted 0.3% gain month over month.

Thomson Reuters was projecting a 0.2% gain, and the Wall Street Journal had projected a 0.3% gain. What stands out here is that the annualized year-over-year industrial production was higher by 1.6% in September.

The previously reported decline in industrial production from August was revised to −0.7% from a prior −0.9% reading. This suggests that some of the storm-induced weakness and disruption may have been less severe than initially been projected.

Another area showing a rare gain was in capacity utilization, rising a less than expected 0.2 points to 76.0%. The Thomson Reuters poll was calling for 76.2%, and the Wall Street Journal projected a 76.3% reading. Capacity in manufacturing was still quite low at 75.1%.

The Federal Reserve projects that the impact of hurricanes Harvey and Irma restricted growth by a total of 0.25 points in total industrial production in the month of September. That reading could have been far worse when considering how much Hurricane Katrina hurt this production number back in 2005. Still, there was a huge post-Katrina snapback that year.

Also noted by the Federal Reserve were gains of 0.1% in factory output, followed by a 0.4% gain in mining output and a 1.5% gain in utility production. Gains were seen in the major market groups of final products and nonindustrial supplies, with only a tiny rate of slower growth in materials.