US industrial production boosted by autos, 'base effects' in September
US industrial production continued growing at a steady clip last month on the back of increased mining and manufacturing output, with the latter boosted by higher output of autos which economists expected to fade.
Despite that, the degree of slack that existed in US industry at the end of September was a wider-than-anticipated 78.1% (consensus: 78.5%).
Total output grew by 0.3% month-on-month, according to the Federal Reserve, as expected by economists.
Production of business equipment recorded the biggest increase, jumping by 0.8% over the month, alongside increases of 0.2% in the output of both consumer goods and materials.
Defense and space equipment output also clocked-in at up by 0.8% on the month, the Federal Reserve said.
Output of construction supplies on the other hand shrank by 0.6% in comparison to August.
By major industry groups, the quickest growth was seen in Mining, where output rose by 0.5% on the month, with factory production ahead by 0.2% and that from Utilities flat.
Within manufacturing, indices for durable goods and 'other manufacturing (publishing and logging)' increased, but that for non-durables declined.
The biggest increases among the former were seen in motor vehicles and parts, output of which surged by 1.7% month-on-month, and wood products.
Versus a year ago, total industrial production grew by 5.1%, with that in Manufacturing up by 3.5%, in Mining ahead by 13.4% - and by 24% from its trough in 2016 - and of Utilities up 5.4%.
Nevertheless, Ian Shepherdson at Pantheon Macroeconomics said the pick-up in the pace of total production from 3.2% in August to 3.5% - a six-year high - was partly the result of favourable 'base effects' which would reverse rapidly come October, pushing the year-on-year rate down to 2.5%.
Regarding the degree of capacity-in-use, in manufacturing it rose from 75.8% to 75.9%, but in Mining it slipped from 92.2% to 92.1% while in Utilities it fell back from 77.9% to 77.7%.
"The underlying trend probably is stronger than that, but not by much. The ISM survey points to continued growth in output at a similar pace, and we would not be surprised to see the hard data outperform on the back of strength in the cyclical components," Shepherdson said.
"Elsewhere, September utility output was unchanged and mining production rose 0.5%, with increased output of oil, natural gas and coal. In short, the industrial recovery continues, but it would be a stretch to call it a boom outside the oil and gas sectors."