US Industrial Production: Harvey pummels production of nondurables goods - Wells Fargo
|According to analysts from Wells Fargo, the 0.9% decline in industrial production in August was affected by the Hurricane Harvey. They added that manufacturing activity is holding up.
Key Quotes:
“Industrial production contracted 0.9 percent in August as the early effects of Hurricane Harvey took hold. All major industry groups were down over the month. Utilities posted the steepest drop, down 5.5 percent. While Harvey likely weighed on demand in areas hit by the storm, mild temperatures across the United States, particularly the East Coast, led to lower usage of air conditioning last month.”
“Manufacturing output declined 0.3 percent last month as the storm hit the nation’s energy center. Production at petroleum and coal plants fell 1.6 percent in August. An even bigger hit was taken by the chemical industry, where output sank 2.2 percent. More muted was the pullback at plastics and rubber manufacturers, where production fell 0.3 percent.”
“In total, the Federal Reserve estimates that the storm sliced off about 0.75 percentage points from total manufacturing output in August. Limiting the pullback in manufacturing activity last month was stronger production among durable goods.”
“Durables rose 0.3 percent last month amid strength in metals and transportation equipment ex-autos. Autos actually posted the largest increase among manufacturing industries last month, up 2.2 percent, but that still was not enough to reverse the previous month’s decline.”
“The effects from Hurricanes Harvey and Irma are expected to plague much of the data for at least another month. Regional reports, as a result, will take on greater importance in order to isolate the impact of the storms and gauge recent activity. To that end, the Empire State Manufacturing index, the first of the regional purchasing managers’ indices released for September, suggests that through the recent disruptions, factory activity remains strong. The index slipped 0.8 points in September, but at 24.4 remains at a high level.”
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