MAPI responds to Federal Reserve Board report on industrial production

The Federal Reserve Board reports that industrial production increased 0.4 percent in September after falling 1.4 percent in August. Daniel J. Meckstroth, chief economist for the Manufacturers Alliance for Productivity and Innovation (MAPI), offered the following commentary:

“Mining production increased 0.9 percent and utilities increased 1.5 percent, but manufacturing production increased only 0.2 percent in September after falling a much larger 0.9 percent the prior month. Manufacturing production did increase in 12 of the 20 major manufacturing industries and was flat in two others. Declines were reported in six industries, and there were large double-digit reductions in primary metals, motor vehicles and parts, and printing and support.

“Manufacturing production was front-loaded this year; it increased at a 9.8 percent annual rate in the first quarter but has since flattened out in the past two quarters, increasing at a 1 percent annual rate in the second quarter and falling at a 0.9 percent annual rate in the third quarter,” Meckstroth added. “We believe that manufacturing activity will grow at a modest 2.3 percent annual rate in the fourth quarter of this year, slightly faster than the overall economy. Housing starts and motor vehicles sales continue to post relative strong gains thanks to pent-up demand, capital goods makers have order backlogs that they are working down until we can get more clarity in fiscal policy, and the emerging countries are rebounding from a spring slump, which should improve export opportunities. The good news in the report is that manufacturing has returned to growth; the bad news is that the pace of growth is definitely much slower.”