Supply Chain Council of European Union |

U.S. factory production rises for a third straight month

U.S. factory production rose for a third month in September, suggesting firm growth in manufacturing that’s underpinned by solid business investment and demand for consumer goods.

The 0.4 percent increase in output matched the upwardly revised August advance, Federal Reserve data showed Tuesday. Including mining and utilities, total industrial production also rose 0.4 percent in September.

While domestic demand for merchandise has generally softened amid both shifting consumer preferences and relentless inflation, the report showed healthy demand for appliances, motor vehicles and clothing. Business investment has also proved resilient and helped to bolster factory activity.

Looking ahead, there are growing concerns about the health of the economy and consumers’ willingness to spend. Overseas demand is also coming under pressure, with a deteriorating global economic outlook and a strong dollar making U.S. goods more expensive.

Factory production was broad among industry groups, including gains in computers and electronic products, fabricated metals and furniture.

The median forecast in a Bloomberg survey of economists called for factory output to rise 0.3 percent and for total industrial production to inch up 0.1 percent.

The Fed’s report also showed capacity utilization at factories increased to 80 percent, matching the highest since 2000 and a sign that labor and supply constraints have eased.

Outside of manufacturing, utility output fell 0.3 percent. Mining increased 0.6 percent, supported by oil and gas extraction. Oil and gas well drilling climbed 1 percent, extending a run of solid gains.

Nonetheless, data out Monday showed factory activity in New York state contracted in October for a third straight month. The New York Fed bank’s survey also showed respondents were more downbeat about future business conditions. Separate regional measures from the Philadelphia, Richmond and Kansas City Fed banks will be released in coming weeks.

While Fastenal Co. reported last week that net sales beat estimates in the latest quarter, the manufacturing and construction supply wholesaler indicated growing uncertainty among its customers.

“It’s not, hey, the sky is falling, but the confidence is very, very cautious, and we’re preparing for that type of environment,” Daniel Florness, Fastenal’s chief executive, said on the company’s earnings call.

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