U.S. manufacturing made a strong post-hurricane recovery in October, making up almost all output lost from hurricanes Harvey and Irma and boosting overall industrial production.
Manufacturing output clocked a one-month 1.3% increase in October, which is significantly above the combined manufacturing output change in each of the five prior months. Hurricane-related catch-up drove most of the growth, with newly-minted cars and car parts playing a big part output.
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"Manufacturing output is surging [and] is at the best level since the recession bottomed way back in June 2009," said Chris Rupkey, chief financial economist at MUFG.
More broadly, manufacturing helped drive nationwide growth in industrial production, a measure that includes manufacturing output, along with mining and utility production. It rose to a seasonally adjusted 0.9% in October from the prior month, the Federal Reserve said Thursday, two-thirds of which can be attributed to producers making up for lost output after recent hurricanes.
Economists surveyed by The Wall Street Journal had expected a 0.6% gain for September. From a year earlier, industrial production rose 2.9% in October.
After hurricanes battered the southern and eastern U.S, overall industrial production grew 0.4% in September from the prior month and declined 0.5% in August. The storms caused refineries and plants on the Gulf Coast to shut down and stalled other key parts of the manufacturing process. The Fed said hurricanes knocked out a significant slice of production in both months.
Still, October's manufacturing gain is another boon to the industry, which was already picking up steam this year because of a weaker dollar, more stable oil prices and global economic growth. The Institute for Supply Management's closely watched index of manufacturing hit a more-than-six-year record in mid-2017.
Capacity utilization, which reflects how much industries are producing compared with what they could potentially produce, rose by 0.6 percentage point to 77% in October, which is 2.9 percentage points below the long-run average. Economists had expected 76.4% last month.
Mining output decreased 1.3% in October from a month earlier because a storm affecting the Gulf of Mexico that impacted oil and gas drilling and extraction. The Fed said this effect will be "short-lived." Utility production increased 2%.
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(END) Dow Jones Newswires
November 16, 2017 11:25 ET (16:25 GMT)