Industrial Production Improves in September

by devteam October 16th, 2009 | Share

Industrial production figures surprised Wall Street this morning. Despite aggreate hours falling half a percentage in September, production managed to climb 0.7%, far above +0.2% expectations and marking the third straight monthly gain. Upward revisions also pushed the August headline up four-tenths to +1.2%.

Three consecutive gains put the quarterly advance at a +5.2% annual rate, not a bad pace after five straight quarterly contractions.

“Thanks to the cash-for-clunkers program, replenishing inventories, and exports, U.S. factories are getting back into business,” said Jennifer Lee, economist at BMO.

Manufacturing production rose 0.9% September, versus +1.2% in August, but utility production fell -0.7%.

Carl Riccadonna, economist at Deutsche Bank, noted “the ongoing rebound in motor vehicle production was an important driver of the pickup in manufacturing.” That component rose 8.1% in September after a 6.1% gain in August. The gains were not solely auto-related though; the ex-autos figure rose 0.5% in September and 0.9% in August.

Another surprise was the capacity utilization rate, a measure of economic slack. It got lifted from 69.9 to 70.5 in September, breaking a six-month rut below the 70 threshold. The all-time low of 68.3 was registered in June.

With the rate still below the multi-decade average of more than 80%, analysts said the report suggests inflation remains a distant worry.

“In a normal economic cycle, reducing slack might be enough on its own to justify rate hikes,” added Erik Lascelles, senior strategist at TD Securities. “However, there is so much slack that the Fed will surely wish to see a goodly portion of the slack be drawn taught before even considering the possibility.”

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of is prohibited.

About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

See all blogs


Leave a Comment

Leave a Reply

Latest Articles

Real Estate Investors Skip Paying Loans While Raising Billions

By John Gittelsohn August 24, 2020, 4:00 AM PDT Some of the largest real estate investors are walking away from Read More...

Late-Stage Delinquencies are Surging

Aug 21 2020, 11:59AM Like the report from Black Knight earlier today, the second quarter National Delinquency Survey from the Read More...

Published by the Federal Reserve Bank of San Francisco

It was recently published by the Federal Reserve Bank of San Francisco, which is about as official as you can Read More...