WASHINGTON: US industrial production picked up more than anticipated in September, official data showed Tuesday, as manufacturing output continued to expand.
The figures defied expectations for near-flat growth, as rising interest rates start to bite, consumer spending shifts from goods to services and a strong dollar makes US goods more pricey for customers abroad.
Total industrial production rose 0.4 percent in September, bouncing back from a revised 0.1 percent dip in August, Federal Reserve data showed on Tuesday.
In particular, factory output was up 0.4 percent, maintaining its August pace, with easing supply strains a boon for the sector.
Products such as computers and electronics, along with motor vehicles and parts, logged gains of at least one percent last month.
But momentum in factory activity has markedly slowed in the third quarter, according to latest figures.
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“Factory output faces headwinds from a ratcheting up in interest rates, which will weigh on demand and slow economic activity,” said Rubeela Farooqi, chief US economist at High Frequency Economics, in an analysis.
Meanwhile, mining output picked up 0.6 percent in September, helped by gains in oil and gas extraction, while utilities output dropped 0.3 percent on a dip in electric power generation, the report said.
Apart from the Fed raising interest rates to tamp down inflation and a shift in consumer behavior, downturns in China and Europe have also taken a toll on manufacturing, said Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a report.
Europe has been struggling with an energy crisis, with fallout from Russia’s invasion of Ukraine causing prices to rocket, pushing already-high inflation to new records.
China’s economy has been bogged down by a strict zero-Covid policy involving snap lockdowns that have kept consumers jittery and snarled supply chains.
While Shepherdson expects US manufacturing to fare better than survey data suggested previously – as auto output improves on easing chip shortages – heightened uncertainty could also cause some firms to hold on to their cash instead, he cautioned.
In September, industrial capacity in use ticked up 0.2 points to 80.3 percent, according to the report on Tuesday.