U.S. industrial production rebounded in October as auto production, which has been hurt by supply chain problems, posted a strong increase and the adverse effects from Hurricane Ida faded
Industrial production rose 1.6% last month after a 1.3% plunge in September, the Federal Reserve reported Tuesday. The gain was double what had been expected.
The September weakness reflected severe shortages of semiconductor chips that contributed to a fall in auto production and the lingering impacts of Hurricane Ida which disrupted oil and gas production.
Industrial output in October was also helped by an 11% jump in production of motor vehicles and parts, after two months of declines caused by severe supply chain shortages of the semiconductors needed as component parts.
In the major industry groups, manufacturing activity rose 1.2% while mining, which includes oil and gas production, surged 4.1% and output at the nation’s utilities was up 1.2%.
Economists cautioned that even with the better-than-expected October gain, production in coming months will be weighed down by continuing supply chain bottlenecks.
“With many of those factories still running well below capacity, and industry estimates suggesting that the semiconductor shortage will persist, at a minimum until well into next year, we expect auto production will remain weak,” Hunter said.
The Fed reported that output of machinery fell by 1.3% last month with part of that decline attributed to the strike at farm implement manufacturer John Deere.