U.S. Manufacturing Output Increased for Sixth Month in October
U.S. manufacturing production rose at a solid pace in October, marking the sixth straight advance as factories continued to recover from the depths of the pandemic-driven lockdowns earlier this year.
Output at factories increased 1% from the prior month, matching the median forecast in a Bloomberg survey of economists, after an upwardly revised 0.1% gain in September, Federal Reserve data showed Tuesday. Total industrial production, which also includes mining and utility output, rose 1.1% in October after a 0.4% decrease a month earlier.
The October gain in factory output was broad-based with increased production of consumer goods, business equipment and construction supplies that indicates a solid start to the fourth quarter. While output continues to improve against a backdrop of lean inventories and steady demand, supply chain disruptions and capital investment cutbacks remain challenges for the industry.
“The acceleration in manufacturing output in October suggests that, after lagging the broader recovery over the past six months, the factory sector is now catching up some lost ground,” Michael Pearce, senior U.S. economist at Capital Economics Ltd., said in a note. “With inventory levels still lean, we expect production to continue rising over the coming months, even if the recovery in consumption falters.”
Despite the improvement last month, the Fed’s index of manufacturing remains about 5% below its level in February.
The Fed report follows several other measures that have pointed to steady improvement in the manufacturing sector. The Institute for Supply Management’s manufacturing gauge rose to the highest since 2018 last month, as a measure of new orders surged to a 16-year high.
Meanwhile, employment and average hours worked in the sector also increased in October, according the government’s monthly jobs report.
Production of motor vehicles and parts declined for a third straight month. Factory output excluding auto production increased 1.1%. Utility output rose 3.9% as an increase in electricity demand offset a decline in natural gas production.
Mining output fell 0.6% after a 1.2% advance a month earlier.
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