US industrial Production: October data not as weak as the headline suggests - Wells Fargo
|According to analysts from Wells Fargo, the flat reading in October US Industrial Production was due to weakness in the utilities sector while they noted that output in mining and manufacturing rose over the month, pointing to modest improvement in the industrial sector.
Key Quotes:
“On the surface, today’s industrial production report looks like another blow to a sector that has been struggling for more than a year now. Industrial production was flat in October, missing even modest expectations for a 0.2 percent gain. What’s more, instead of an uptick in September, revisions show that production actually fell 0.2 percent in the final month of Q3.”
!Peeling back the layers, however, shows that recent conditions are not as weak as the headline and revisions would suggest. Mild fall weather after a hot summer has dampened utilities output the past two months. An important source of the downward revision to industrial production in September was utilities output falling 3.0 percent versus an initially reported decline of 1.0 percent. Utilities output fell another 2.6 percent last month as the warmest October since 1963 kept households from switching on their heat in much of the country.”
“Even with the gains of recent months, the trend in manufacturing remains largely sideways; total manufacturing production is only even with its year ago level. With the global economic backdrop more stable and growth set to pick up in the United States, however, we expect to see activity in the manufacturing sector to improve a bit in the coming months.”
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