US Factory Production Continues to Rise

US manufacturing output continues to rise—now the third time in four months—on the back rising sales of consumer goods and construction materials. Experts are now saying that this is a major sign that the industry is recovering—albeit slowly—from extended stagnancy.

According to MFR Inc chief US economist, Joshua Shapiro, “While better than the August data, which pointed to weakness, the September results still only point to a manufacturing sector struggling to grow at an anemic pace.”

But U.S. industrial production did rise, slightly, in September, showing a bit of a rebound in manufacturing and mining output which was offset by a surprisingly weak demand for utilities. Still, this points to moderate acceleration through the third quarter.

At the same time, the Federal Reserve’s most recent report, Monday, does suggest that industrial sector’s slowdown may have finally come to an end. They indicate that gains in output will probably remain a bit muted while the sector continues to feel restricted by he dollar’s last rally, followed by a collapse in oil prices, and weak global demand overall.
“It is hard to have a full-blown, strong economic expansion if the manufacturing sector is hurting and that has been the case this year,” comments Naroff Economics Advisers chief economist Joel Naroff.

However, production is ramping up, a little, thanks to some drag from several variables. This includes falling oil prices on the other side of a strong dollar and falling overseas markets. Steady household spending—which is the most significant characteristic of the economy—signals that factories will press onward over the next few months, gradually contributing more to growth.

Indeed, HSBC Securities USA economist Ryan Wang, “The drag from falling energy investment has abated,” correctly projecting a rise in factory output. “That should allow overall business investment to resume modest growth in the year ahead. We’re still likely to see minimal gains in manufacturing output.”

Now, manufacturing accounts for roughly 12 percent of the US economy. This breaks down to sectors including mining, oil, and utility production. Overall, consumer goods production grew only 0.2 percent, but business equipment output fell 0.2 percent. Fortunately, construction materials also climbed 0.8 percent recovering a little more than 50 percent of its previous 1.4 percent drop.