US industrial output drops 1.3% in Sept amid supply issues: Fed

AFP News Agency

18th Oct, 2021. 08:12 pm

WASHINGTON: Output by US industries fell 1.3 per cent last month amid continued supply constraints hindering manufacturing, the Federal Reserve reported on Monday.

Declines were apparent across multiple categories, but stark in the auto sector, with production of motor vehicles and parts falling 7.2 per cent “as shortages of semiconductors continued to hobble operations,” the central bank said.

The drop came as a surprise as economists were forecasting a modest increase in industrial production.

And after reporting a gain in August that returned total output in the world’s largest economy to its pre-pandemic level, the Fed revised the data to instead show a decline.

Faced with ongoing supply bottlenecks, factory output fell 0.7 per cent last month after a 0.4 per cent drop in August according to the revised data.

Mining, including oil drilling, plunged 2.3 per cent, while cooler weather contributed to the 3.6 per cent drop in utilities output.

However, the report said some of the declines were due to the impact of Hurricane Ida, which caused flooding and destruction in parts of Louisiana and the northeastern United States.

“The lingering effects of Hurricane Ida more than accounted for the drop in mining in September; they also contributed 0.3 percentage point to the drop in manufacturing,” the report said.

“Overall, about 0.6 percentage point of the drop in total industrial production resulted from the impact of the hurricane.”

Despite the declines, total output is 4.6 per cent above September 2020. However, industrial capacity in use declined sharply to 75.2 per cent, a full point lower than in August.

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