US factory output barely rises after tepid gains in prior months
US FACTORY output rose in October by less than expected after downward revisions to prior months, suggesting manufacturing is losing some steam as domestic and global demand moderates.
The 0.1 per cent increase in factory production last month followed a downwardly revised 0.2 per cent advance in September, according to Federal Reserve (Fed) data released on Wednesday (Nov 16). Including mining and utilities, total industrial output fell 0.1 per cent in October, the second decline in three months.
Manufacturing output was supported by motor vehicles as well as electrical equipment and aerospace transportation. Excluding autos, factory production stagnated, the weakest print in four months.
Nondurable manufacturing declined for the first time since June, dragged down by petroleum products and textiles.
With concerns brewing about next year’s demand environment as Fed policy makers ratchet up interest rates, the outlook is tenuous for manufacturers.
Higher borrowing costs, which have already taken a toll on home construction, risk diminishing capital spending appetites in other sectors as recession fears mount. Factory orders may also continue to weaken as many retailers look to reduce an inventory overhang.
The median forecast in a Bloomberg survey of economists called for a 0.2 per cent increase in factory output and a 0.1 per cent rise in industrial production. BLOOMBERG
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