Auto Production Jumped 11% in October, Driving Industrial Growth
Beating two months of losses, industrial production rose 1.6 points in October to 101.6 of its 2012 average as automotive production returned to growth and the manufacturing, mining and utilities industries recovered from September’s Hurricane Ida. The increase in cars and trucks production suggests auto companies are adapting to the serious shortage of semiconductors which has plagued their industry all year.
Manufacturing output rose by 1.2 points to 99.8% of its 2012 average, the highest level it’s reached since March 2019, thanks to a remarkable recovery in the automotive sector. Motor vehicles and parts production, which fell in both September and August, rose to an annualized rate of 9.10 million trucks and cars from September’s 7.66 million annualized rate.
Auto producers made up the manufacturing sector with the largest recorded productivity boost, contributing 11 points to the industrial productivity index. Manufacturing productivity got an additional boost from the petroleum and chemicals industry, which added 5 points to the index.
Manufacturing productivity growth was offset by significant losses in machinery, electrical equipment and textile mills, all of which recorded an output loss of over one percent. The Federal Reserve System, which puts out the productivity report, noted that the 1.3 point loss in machinery productivity was due to “a strike at a major manufacturer,” likely Deere & Co. More than 10,000 John Deere assembly workers represented by the UAW have been on strike since October 4. Workers there are scheduled to vote on a new agreement with the tractor manufacturer late Wednesday, November 17.
All major market groups saw improvements in October, the Federal Reserve reported, especially in materials, consumer goods, and defense and space equipment. The index for materials added 2.3 points while the consumer goods index rose by 1.4.
Mining output, which includes refineries and oil extraction operations affected by September’s hurricane, rose by 4.1 points, while utilities output rose 1.2 points.
The report also measures capacity utilization, which improved to 76.4% of the 2012 average overall and 76.7% in manufacturing specifically.
