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US industrial production retreated last month amid a drop in oil output and as manufacturing posted only a modest gain, the Federal Reserve reported Wednesday. online news
The disappointing result comes as companies have struggled with surging costs and supply chain snarls, as well as weakening demand amid rising interest rates, that also make the cost of US-made goods more expensive abroad.
Total output slipped 0.1 percent, a weaker-than-expected result that was made worse by downward revisions to the prior month’s data showing a modest uptick rather than the big increase initially reported, the data showed.
Petroleum production fell 1.9 percent, as the Fed said “a drop in oil and gas extraction outweighed improvements in oil and gas well drilling and in coal mining.”
But output of motor vehicles and parts jumped 2.0 percent, and electronic equipment and appliances gained almost that much, a sign supplies of key components like computer chips have eased.
Those gains outweighed losses in other categories, the data showed.
Economists remain wary about the coming months as the world’s largest economy slows and faces a reversal of growth.
“We look for the industrial sector more broadly to suffer a downturn as the economy experiences a mild recession in the first half of 2023,” said Nancy Vanden Houten of Oxford Economics.
“Weakening demand, higher interest rates, and supply chain difficulties will continue to pose challenges for industrial activity in the months ahead,” she said in an analysis of the data.
Utilities output fell 1.5 percent last month, the third straight decline, the report said.
And industrial capacity slipped to 79.9 percent.
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Notes from APS Radio News
Today, November 16, 2022, the Federal Reserve issued its report on US manufacturing.
The report read, in part:
Industrial production decreased 0.1 percent in October, and its gain in September was revised down to 0.1 percent. Manufacturing output edged up 0.1 percent in October, and its increases in July, August, and September were all lower than previously reported. In October, the index for mining stepped down 0.4 percent, and the index for utilities fell 1.5 percent. At 104.7 percent of its 2017 average, total industrial production in October was 3.3 percent above its year-earlier reading. Capacity utilization decreased 0.2 percentage point in October to 79.9 percent, a rate that is 0.3 percentage point above its long-run (1972–2021) average.