U.S. Industrial Production Drops Again in October

WASHINGTON (Reuters) – U.S. industrial production fell for a second consecutive month in October, impacted by hurricanes and a strike at Boeing. However, a rebound is anticipated in November as these disruptions wane.

Industrial output declined by 0.3% in October, following a revised 0.5% drop in September, according to the Federal Reserve. Economists had predicted a 0.3% decrease for October after previously reporting a 0.3% decline in September.

The Fed indicated that the strike reduced industrial production by 0.2 percentage points in October and 0.3 points in September. The effects of Hurricane Milton and Hurricane Helene contributed to a 0.1 percentage point decrease in production. Workers resumed their duties last week after accepting a new contract, and the hurricane effects are dissipating.

Industrial production experienced a year-on-year decrease of 0.3% in October.

Factory output fell by 0.5% last month, following a 0.3% decline in September, with year-on-year factory production also down by 0.3%. Manufacturing, which represents 10.3% of the economy, has been challenged by rising interest rates and is expected to remain stable even as the U.S. central bank begins its easing cycle.

U.S. Treasury yields have spiked due to concerns that incoming President Donald Trump’s policies might fuel inflation, limiting rate flexibility next year.

• Motor vehicle and parts output dropped 3.1% last month.
• Aerospace production fell 5.8%.

This resulted in a 1.2% decline in durable manufacturing. In contrast, nondurable manufacturing output rose slightly by 0.1% due to increases in chemicals, paper, petroleum, and coal products, even as textile, apparel, rubber, and plastic sectors faced declines.

Mining output increased by 0.3% last month, recovering from a 1.9% decrease in September. Utilities production rose by 0.7% compared to a 0.3% gain in the previous month.

Capacity utilization within the industrial sector fell to 77.1% from 77.4% in September, remaining 2.6 percentage points below the 1972–2023 average. The factory operating rate decreased by 0.5 percentage points to 76.2%, which is 2.1 percentage points lower than its long-term average.