US industrial output drops 1.3% in Sept amid supply issues: Fed

Washington (AFP) –


Output by US industries fell 1.3 percent last month amid continued supply constraints hindering manufacturing, the Federal Reserve reported Monday.

Declines were apparent across multiple categories, but stark in the auto sector, with production of motor vehicles and parts falling 7.2 percent "as shortages of semiconductors continued to hobble operations," the central bank said.

The drop came as a surprise as economists were forecasting a modest increase in industrial production.

And after reporting a gain in August that returned total output in the world's largest economy to its pre-pandemic level, the Fed revised the data to instead show a decline.

Faced with ongoing supply bottlenecks, factory output fell 0.7 percent last month after a 0.4 percent drop in August according to the revised data.

Mining, including oil drilling, plunged 2.3 percent, while cooler weather contributed to the 3.6 percent drop in utilities output.

However, the report said some of the declines were due to the impact of Hurricane Ida, which caused flooding and destruction in parts of Louisiana and the northeastern United States.

"The lingering effects of Hurricane Ida more than accounted for the drop in mining in September; they also contributed 0.3 percentage point to the drop in manufacturing," the report said.

"Overall, about 0.6 percentage point of the drop in total industrial production resulted from the impact of the hurricane."

Despite the declines, total output is 4.6 percent above September 2020.

However, industrial capacity in use declined sharply to 75.2 percent, a full point lower than in August.