Strike dominates industrial production report

November 16, 2023

The full force of the UAW strike showed up in the October production data. Motor vehicle and parts production plunged 10%, pulling manufacturing output down 0.7%. Excluding the impact of motor vehicle and parts production, manufacturing would have risen 0.1% instead. With the UAW strike action having concluded, the rebuilding of stocks is expected to make a positive contribution to output from a supply standpoint. However, high financing rates for new vehicles and rising delinquency rates for motor vehicle loans indicate consumer demand for new vehicles may be limited in the quarters ahead.

October industrial production overall declined 0.6%, overshooting expectations for a 0.4% drop. September industrial output was revised lower to +0.1% from the originally reported 0.3% increase.

Business information processing output jumped 2.4%, the largest increase in two and a half years. Companies harnessing the power of generative AI could give this sector a further lift in 2024.

Defense and space equipment increased 1.7%, a result of the uncertain world we live in today. This category is up 10% annually, surpassing the 0.7% annual decline for overall industrial output.

The remainder of the report was mixed. Primary metal output fell 1.7% while machinery production declined 0.7%. Utility output declined 1.6% in October, which was partly offset by a 0.4% rise in mining output.