US Manufacturing Output Shows Solid Growth Despite Auto Strikes

         

Summary: US manufacturing output increased more than expected in September, indicating a strong economic momentum as the third quarter came to a close. Despite strikes in the automobile industry that impacted motor vehicle production, manufacturing output rose by 0.4%, surpassing economists’ forecasts. The United Auto Workers (UAW) union’s limited strikes at General Motors, Ford, and Stellantis factories contributed to the decline in motor vehicle and parts output. However, the manufacturing sector still faces challenges from slowing demand due to higher interest rates.

The Federal Reserve reported that US manufacturing output expanded by 0.4% in September, exceeding expectations and indicating the economy’s strength as the third quarter ended. Despite strikes in the auto industry affecting motor vehicle production, the manufacturing sector showed solid growth. The United Auto Workers (UAW) union initiated limited strikes at factories owned by General Motors, Ford, and Stellantis in mid-September, leading to a 0.3% decline in motor vehicle and parts output. However, other areas of manufacturing performed well, with durable goods manufacturing output rising at a 2.3% annualized rate. This growth was counterbalanced by a 2.4% decline in nondurable manufacturing.

The Federal Reserve’s interest rate hikes since March 2022 have impacted manufacturing by slowing demand for goods. Despite this, the worst may be over for the sector, as the Institute for Supply Management’s measure of national factory activity reached a 10-month high in September. Notable increases in production were seen in wood, primary metals, plastics, and rubber products, while apparel, leather, and printing and support goods saw declines in output.

In addition to manufacturing, mining output rose by 0.4% in September, while utilities production fell by 0.3%. Overall industrial production increased by 0.3% after being unchanged in August. The third quarter saw a 2.5% growth rate for industrial output, following a 0.7% growth rate in the second quarter. Capacity utilization for the industrial sector rose to 79.7% in September, matching the long-term average, while the manufacturing sector’s operating rate increased to 77.8% but remained slightly below its average.

Tags: US manufacturing, economic growth, auto strikes, Federal Reserve, economic indicators

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