Strike and storm damage compromised industrial production

November 15, 2024

October industrial production lost 0.3%, weaker than expectations. A strike at a civilian aircraft producer took 0.2% off industrial output while the effects of two hurricanes subtracted 0.1%. The previous month's production was revised lower to a steeper drop of 0.5%.

Manufacturing output dropped 0.5% on weak durable goods. That was also worse than expected. Aerospace and miscellaneous transportation equipment output plummeted 5.8% because of the strike. That exacerbated September's 8% plunge, the largest drop in aerospace since COVID, when production fell 22% in April 2020. While the strike has ended, it will take weeks until production is fully up and running again.

A 3.1% drop in motor vehicle and parts production and a 3.3% decline in primary metals contributed to the weakness. Light truck assembly headlined the fall in autos. Nondurable goods manufacturing edged higher on petroleum and coal.

Mining output added 0.3% last month after a weak September when oil and gas extraction facilities were hit by two hurricanes, Francine and Helene. Even with a small bounce, mining production is 0.7 percentage points below the previous 12-month average. Business equipment output fell 2.7% on transit equipment, which was off 26.7% over September and October.

Utility output climbed for the second straight month, up 0.7%. Electric gains were partially offset by losses in natural gas. Energy grids are stressed by data center demand and extreme weather events. Tech behemoths are scrambling to increase efficiency and secure proprietary energy sources, including nuclear.

Capacity utilization fell for the second straight month, continuing the decline that started in late 2022. The bulk of that drop can be attributed to durable goods. Computer chips and other electronic components were down; they're now off almost 11% in two years. Most of the fastest chips are produced abroad.