THE ECONOMY: Poor September Report on Industrial Production

By at 18 October, 2019, 8:52 am

by Raymond J. Keating-

The latest industrial production report from the Federal Reserve was negative pretty much across the board.

After welcome growth in August, industrial production (i.e., the real output of the manufacturing, mining, and electric and gas utilities) declined by 0.4 percent in September. That included a 0.5 percent decline in manufacturing production, and a 1.3 percent fall in mining.

In September, total industrial and manufacturing output – the largest chunk of industrial production – were both down from a year earlier. Industrial production in September was off by 0.1 percent versus a year earlier, and manufacturing output was down by 0.9 percent. (See the following two charts.)

Source: Federal Reserve Bank of St. Louis, FRED

Source: Federal Reserve Bank of St. Louis, FRED

As for the impact of the GM auto worker strike, production was still down taking that into account. The Fed noted, “Excluding motor vehicles and parts, the overall index and the manufacturing index each moved down 0.2 percent.”

Finally, it remains deeply troubling that U.S. manufacturing production still has not recovered to its pre-Great Recession heights (as noted below).

Source: Federal Reserve Bank of St. Louis, FRED

Policymakers need to solidify a pro-growth, pro-entrepreneur, pro-investment policy foundation upon which manufacturing and all other sectors of our economy can flourish. In the short term, that means getting trade and tariff costs and uncertainties out of the way. In the mid to long-term, a continued path of tax and regulatory relief are important for the overall strength and vitality of this sector.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.


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