Industrial Production Positive in September

By SBE Council at 17 October, 2023, 6:58 pm

by Raymond J. Keating –  

Changes in industrial production – that is, the physical output, free from price changes, of the manufacturing, mining and utility sectors – have been uneven in recent months, and disappointing over the longer haul.

Fortunately, the latest report pointed to total industrial production growing by 0.3 percent in September, including manufacturing output up by 0.4 percent. Mining also grew by 0.4 percent.

In recent months, total industrial production grew in April, declined in May and June, grew again in July, was flat in August, and then we saw this growth in September. Over the past year, industrial production declined by 0.1 percent.

The pattern for manufacturing output – the biggest chunk of industrial production – was similar, with growth in April, July and September, and declines in May, June and August. But compared to the same time last year, the decline in manufacturing production has been larger, that is, -0.8 percent.

And as SBE Council has noted before (see the following chart), manufacturing production has been down since August 2018, as well as off from its high set more than 15 years.

Source: Federal Reserve Bank of St. Louis, FRED

It also must pointed out, again, as SBE Council has done previously, that like other major sectors of our economy, manufacturing overwhelmingly is about smaller businesses. For example, 93.1 percent of employer firms in manufacturing have fewer than 100 employees, according to the latest Census Bureau data (2020).

Finally, it should not be ignored that it’s no coincidence that since manufacturing output hit its high in late 2007, regulations have mounted and the U.S. has moved in a protectionist direction on trade. These policy decisions serve as serious impediments for all U.S. businesses, but the resulting rising costs and reduced opportunities always hit smaller firms harder.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest books on the economy are The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist and The Weekly Economist II: 52 More Quick Reads to Help You Think Like an Economist.