Industrial production in the U.S. declined in September as supply chain disruptions and lingering effects of Hurricane Ida weighed on manufacturing and mining output during the month.

Industrial production–which includes factory, mining and utility output–fell at a seasonally adjusted 1.3% in September compared with the previous month, data from the Federal Reserve released Monday showed. The reading missed forecasts from economists polled by The Wall Street Journal, who expected a 0.2% increase.

September’s decline in industrial production is the sharpest since February, when the severe winter weather in the south and central region of the country disrupted factory activity. In August, industrial output fell by a revised 0.1% from a 0.4% rise previously estimated.

Manufacturing output–the biggest component of industrial production–fell by 0.7% in September compared with August. Motor vehicle and parts production decreased by 7.2% amid the shortage of semiconductors.

The lingering effects of Hurricane Ida also contributed to the drop in manufacturing, by 0.3 percentage points, the Fed said.

Supply-chain related problems that have been crippling industrial output in the last few months continue to run rampant, according to regional surveys for the manufacturing sector.

Economists surveyed this month by the Journal expect supply-chain related woes to weigh on the economy through much of next year, with around 45% of them estimating that it will take until the second half of 2022 for bottlenecks to have mostly receded.

“With supply issues broadly likely to last for longer than expected a few months ago, maintaining production levels in line with pre-pandemic levels over the coming months would be a positive sign that supply issues are not leading to a more concerning slowdown in activity,” Citi’s economist Veronica Clark said in a note ahead of the industrial production data release.

Utilities output declined 3.6% in September as demand for cooling subsided after a warmer than usual August, the Fed said. Mining output decreased 2.3%, with rigs in the Gulf of Mexico still idled for much of the month after hurricane Ida.

Industrial production in September was 4.6% above the same month a year earlier.

Capacity utilization, which reflects how much industries are producing compared with what they could potentially produce, fell one percentage point to 75.2% in September. Economists expected a 76.5% reading.
Source: Dow Jones