The Federal Reserve's new September industrial production figures were mixed for manufacturing overall. Real output fell for the second straight month (by a bare 0.08 percent), but figures for two of the last three months were revised up. Nonetheless, stripping out the automotive sector shows the rest of domestic industry still suffering a recession that extended into its tenth month, with after-inflation production still lower than last November's levels. Manufacturing's real year-on-year growth in September was the slowest since February, 2014. And constant dollar manufacturing output still remains lower than at the outset of the last recession, nearly eight years ago.
Here are the manufacturing highlights of the Federal Reserve’s new release on September industrial production:
- Inflation-adjusted manufacturing output edged down sequentially in September by 0.08 percent – its second consecutive monthly decline – the Federal Reserve’s new industrial production figures reported.
- More encouragingly, revisions to previous Fed manufacturing production readings were generally positive. August’s initially reported 0.49 percent monthly shrinkage – which would have been the worst such reading since winter-depressed January, 2014 – was revised up to a 0.35 percent decrease. July’s 0.89 percent gain was revised up to 1.06 percent – the bet since January, 2014. But June’s dip is now pegged at 0.16 percent, not 0.13 percent.
- The automotive sector’s performance was also positively revised by the September Fed report. August’s 6.44 percent plunge – which would have been its biggest since April, 2011 – was revised up to a 5.36 percent decline. And July’s 10.59 percent surge is now estimated to have been 10.64 percent. In September, real automotive output climbed by another 0.16 percent.
- Yet the automotive sector’s growth contrasts sharply with the state of the rest of manufacturing. The September downturn means that the rest of industry’s production is still below its levels of last November, after inflation. This 10-month stretch of cumulative output decline qualifies as a technical recession.
- Moreover, the September figures dragged total after-inflation U.S. manufacturing production 1.87 percent below its level when the last recession began – nearly eight years ago (December, 2007).
- On a year-on-year basis, manufacturing’s September 1.58 percent real output increase was its lowest since February, 2014’s 0.85 percent advance – which was depressed by the harsh winter as well. It was also less than half the 3.31 percent growth rate from September, 2013-September, 2014 but it beat the previous September’s annual growth of 1.51 percent.
- August’s year-on-year real output increase of 1.65 percent was revised up to 1.95 percent, and July’s from 1.82 percent to 1.98 percent. June’s annual growth rate of 1.74 percent remained the same.
- Real output of durable goods – the largest super-sector in manufacturing – fell by 0.16 percent in September. As with manufacturing overall, this represents its second consecutive sequential decrease.
- But August’s 0.87 percent drop – which would have been the biggest since July, 2013’s auto-driven 1.24 percent – was revised up to only 0.53 percent. Moreover, July’s 1.17 percent monthly real durable goods production jump – also influenced by automotive’s performance – was revised up to 1.27 percent.
- Year-on-year, durable goods output in constant dollar terms was up only 1.17 percent in September – the worst since January, 2014’s winter-affected 0.76 percent. Between September, 2013 and September, 2014, real durable goods production increased by fully 4.43 percent, and the previous September over September figure was 2.58 percent.
- August’s yearly inflation-adjusted durable goods output was revised up from 1.29 percent to 1.74 percent. But that’s also much lower than 2013-14’s 4.64 percent, though higher than 2012-13’s 1.57 percent.
- Inflation-adjusted durable goods production is now 2.70 percent higher than in December, 2007, when the last recession began.
- Non-durables’ real output decreased by a bare 0.01 percent on month in September. August’s 0.03 percent gain was revised down to a 0.14 percent drop, but the strong July increase of 0.58 percent was revised up to 0.81 percent – non-durables’ biggest output increase since November, 2014’s 1.08 percent.
- On a year-on-year basis, inflation-adjusted non-durable goods output climbed in September by 2.03 percent, a bit slower than August’s upwardly revised 2.18 percent and somewhat worse than July’s upwardly revised 2.41 percent improvement. The new September year-on-year figure also trailed the previous yearly rise of 2.05 percent, but was much faster than September, 2012-13’s 0.34 percent.
- Non-durable goods production is now down by 7.49 percent after inflation since its pre-recession peak in July, 2007.
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