- US industrial production (IP) rose a stronger than expected 0.6% in September 2013 following an unrevised 0.4% gain in August and a 0.1% dip in July that was slightly weaker than the previously reported unchanged reading. Market expectations had been for a 0.4% gain in industrial production.
- The headline gain in industrial production was the strongest monthly reading since February; however, much of the increase reflected a 4.4% surge in the often volatile utilities component. The more stable manufacturing component inched up just 0.1% in September; however, this built on a sizeable, albeit downwardly revised, 0.5% (was 0.7%) jump in August that more than retraced a 0.4% decline in July.
- The capacity utilization rate rose to 78.3% from 77.9% (was 77.8%) in August.
US IP jumped 0.6% in September 2013, thereby building on an unrevised 0.4% gain in August that followed a 0.1% dip (previously reported as unchanged) in July. The September reading marked the strongest monthly gain in overall industrial production since February 2013; however, most of the monthly strength was concentrated in a 4.4% jump in the often volatile utilities output component that still only partially retraced a combined 6.3% drop over the previous five months combined. The more stable manufacturing component inched up just 0.1% in September although this marked a second consecutive month of growth following a stronger, albeit downwardly revised, 0.5% (was 0.7%) gain in August that in turn more than retraced a 0.4 drop in July. The modest gain in manufacturing output in September was despite solid motor vehicle production that pushed the motor vehicle assembly rate to 11.5 million units, which was the strongest rate since June 2006. Mining output inched up 0.2% in September following 0.6% and 1.6% increases in August and July, respectively.
The increase in overall industrial output pushed September capacity utilization rate up to 78.3% from 77.9% (was 77.8%) in August and 77.7% (was 77.6%) in July.
While most of the headline increase in September reflected a jump in the volatile utilities component, the gain in manufacturing output in the month, while modest, built on a stronger increase in August and, despite a drop in July, left the measure still up an annualized 1.3% in the third quarter of 2013 as a whole. This marked a notable improvement from the 0.1% dip recorded in the second quarter. Including utilities and the mining sector, overall industrial production growth strengthened to a 2.3% pace in the third quarter of 2013, which was up from a 1.1% gain in the second quarter. Monthly data to date is pointing to some offsetting slowing in other sectors of the economy in the third quarter of 2013; however, today’s report remained consistent with our expectation that overall GDP grew at an annualized 2.2% rate in the quarter, which would represent only a modest slowing from the 2.5% increase in the second quarter.
RBC