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The numbers: Industrial production fell for the first time in five months in September, surprising economists who had expected more steady growth from the factory sector.
Industrial output fell 0.6% in September, the first decline after four straight months of gains, the Federal Reserve reported Friday.
The decline was well below Wall Street expectations of a 0.4% gain, according to a survey by MarketWatch.
Output remains 7.1% below its pre-pandemic level.
What happened: The declines were widespread in September. Manufacturing alone fell 0.3% after a 1.3% rise in August. Output of motor vehicles and parts fell 4% in the month.
Utilities output fell a sharp 5.6% in September after a 1% decline in the prior month.
Mining production rose 1.7% after a 2.4% fall in August.
Capacity utilization fell to 71.5% in July, the highest/lowest rate since June. The capacity utilization rate reflects the limits to operating the nation’s factories, mines and utilities
Big picture: Activity in the factory sector has been picking up in recent months, reversing the plunge that occurred at the start of the pandemic. On its face, the decline in September shows it may be difficult for the sector to continue to expand until the virus pandemic subsides.
What are they saying? “We expect industrial production will contend with significant challenges from the ongoing pandemic and that output will advance at a much slower pace, constrained by weak demand, supply chain disruptions, low oil prices and elevated uncertainty,” said Oren Klachkin, economist at Oxford Economics.
Market reaction: U.S. equity benchmarks moved sharply higher on Friday after the strong retail sales data for September. The Dow Jones Industrial Average DJIA, +1.00% was up 315 points in midmorning trading.
