U.S. industrial production grows sharply in October on rise in manufacturing production

U.S. industrial production rose sharply in October, growing 0.9 percent sequentially. The surge was driven by manufacturing production, which grew 1.3 percent. The print came in above consensus expectations of 0.5 percent. Utilities production rebounded in the month, rising 2 percent, while mining dropped 1.3 percent.

Within manufacturing production, both motor vehicles and parts and non-autos production recorded strong rises. While the rise in auto production was widely consistent with the expectation, a more modest rebound was expected in non-auto components, stated Barclays.

Given the expectation that some of the October outperformance is because of the production bounce-back after the hurricanes that temporarily halted activity in August and September, less robust growth is expected in industrial production for the rest of 2017, noted Barclays. However, strength in PMIs in the U.S. and globally, and the synchronized nature of global growth, point to strong manufacturing activity overall in the fourth quarter.

The growth in utilities production was slightly above Barclays’ projection, suggesting modestly stronger private consumption, while the strength in auto and other manufacturing production was greatly consistent with the estimates for inventories, structures investment and building materials.

“Altogether, and after rounding, the data bumped our GDP tracking estimate to 2.7 percent”, added Barclays.

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