Industrial production in the U.S. fell by much more than expected in the month of October, according to a report released by the Federal Reserve on Friday, with manufacturing production showing a notable decrease due to the since-resolved strike at General Motors (GM).
The Fed said industrial production tumbled by 0.8 percent in October after falling by a revised 0.3 percent in September. The steep drop reflected the biggest decrease in production since May of 2018.
Economists had expected production to decrease by 0.4 percent, matching the drop originally reported for the previous month.
The bigger than expected decrease in industrial production came as manufacturing output fell by 0.6 percent in October following a 0.5 percent drop in September.
The strike at GM contributed to a 7.1 percent nosedive in the output of motor vehicles and parts. Excluding motor vehicles and parts, manufacturing output edged down by just 0.1 percent.
However, the report said total industrial production still slid by 0.5 percent when excluding motor vehicles and parts.
Mining production fell by 0.7 percent in October following a 0.8 percent decrease in September, while utilities output plunged by 2.6 percent after jumping by 1.9 percent in the previous month.
“With autos and utilities output set to rebound, industrial production will rise over the remainder of the year,” said Michael Pearce, Senior U.S. Economist at Capital Economics.
He added, “However, the continued subdued global backdrop and the still weak domestic activity surveys suggest that underlying manufacturing output growth will remain close to zero over the coming months.”
The Fed also said capacity utilization for the industrial sector slumped to 76.7 percent in October from 77.5 percent in September. Capacity utilization had been expected to dip to 77.1 percent.
Capacity utilization in the manufacturing and mining sectors edged down to 74.7 percent and 88.8 percent, respectively, while capacity utilization in the utilities sector fell to 75.4 percent.