US Industrial Production: Small gain In September - Wells Fargo
|According to analysts from Wells Fargo, the modest 0.3% gain in industrial production could have been larger had it not been for the quarter percentage point drag from Hurricanes Harvey and Irma.
Key Quotes:
“Do not “rush” to judgment on the modest gain in industrial production for September. Overall output increased 0.3 percent as the Fed estimated a quarter percentage point drag from the effects of hurricanes. Industrial production fell at a 1.5 percent annualized rate in the third quarter, but according to Fed estimates, this figure would have been an increase of at least 0.5 percent had it not been for the effects of the storms.”
“In 2015, industrial production fell in 11 out of 12 months as a retrenchment in the energy sector weighed on mining output along with other factors like a (then) stronger dollar and weak global growth backdrop.”
“Looking into the remaining months of the year and considering the outlook for 2018, we look for industrial production to ramp-up modestly. The factors that weighed on growth in recent years have either reversed ltogether or at least faded. The dollar’s march higher has reversed this year, global growth has been firming and energy prices have broadly stabilized, which has lifted mining output again. On that basis our outlook is for 2.0 to 2.5 percent growth for industrial production in 2018.
“Capacity utilization moved slightly higher and at 76.0 percent, it remains well-below its pre-recession peak. Among other factors, this excess slack could be an impediment to the Fed’s elusive 2.0 percent price inflation target.”
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