MRO Magazine

US manufacturing output increases slightly in September

Washington - US manufacturing output rose in September 2014, led by gains for aerospace products, furniture, clothing and plastics.


October 20, 2014
By MRO Magazine
MRO Magazine


Washington – US manufacturing output rose in September 2014, led by gains for aerospace products, furniture, clothing and plastics.

The Federal Reserve said Thursday that factory production rose 0.5% in September after falling 0.5% in August. Over the past 12 months, manufacturing output has increased 3.7%.

The continued pace of manufacturing output will likely be a bellwether for the broader economy. Job growth has been solid for much of 2014, yet the stock market has been hammered over the past week over concerns about Europe’s financial footing, the slowdown in China’s economy and Ebola outbreaks across three continents. Stalled growth — if not the risk of recession — in much of Europe could cut into demand for US exports.

Total industrial production surged 1% last month, as output from mines and utilities both increased.


Despite the gains, autos appear to have downshifted after driving much of the output growth of the past year. Factory production of motor vehicles and parts slid 1.4% in September, the second straight monthly decline after tumbling 7% in August. Most economists expected a decline after auto production soared in July, largely because there were fewer plant shutdowns in July made output look stronger after the government adjusted the figure for normal seasonal variations

That decline was more than offset by improvements in other sectors. Furniture output rose 2.4% in September, while aerospace products climbed 1.7%. Clothing increased 1.5%, as plastics, rubber, chemicals and computer production also improved.

Paul Ashworth, chief US economist at Capital Economics, interpreted those gains as a sign that factories are successfully weathering the dampened performance of the global economy.

“The slowdowns evident in China and the euro-zone are not having the devastating impact on the US economy that the financial markets now apparently believe,” Ashworth said.

The Standard & Poor’s 500 stock index fell nearly 1% in early trading on Thursday and has plunged more than 3% since the start of the week.

The Fed report on industrial performance also found that output at utilities surged 3.9% last month, likely because hotter than normal temperatures caused more people to crank up the air conditioning. Mining output grew 1.8% and has advanced 9.1% over the past year, reflecting the shale gas boom.

Other recent manufacturing indicators have been mixed.

The Institute for Supply Management, a trade group of purchasing managers, reported that the pace of manufacturing growth fell in September. Its manufacturing index fell to 56.6 from 59 in August. Anything above 50 signals that manufacturing is growing, yet the survey-based index noted that expectations for hiring and new orders declined from their August levels.

Separately, the Commerce Department said that orders to US factories fell in August by the largest amount on record, declining 10.1% after a record increase of 10.5% in August. Both months in the government report were affected by swings in demand for commercial aircraft, which soared in July only to plummet in August.

The US economy grew at a 4.2% annual rate in the April-June quarter, a significant rebound from a 2.1% contraction in the first quarter that reflected in part a severe winter that disrupted a number of activities.

Economists expect that continued gains in employment will spur consumer spending and translate into annual growth of around 3% in the second half of this year.