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Fed Reports Industrial Productivity Hammered by Ida

Fed Reports Industrial Productivity Hammered by Ida

Oct. 19, 2021
The September results are the steepest decline in industrial production since February 2020, when severe winter storms hit Texas and the Gulf Coast.

Industrial production in the U.S. fell 1.3 points in September, the Federal Reserve reported October 18.

Like in February, when industrial production fell 3.1 points, the negative impact on productivity was caused by semiconductor shortages and severe weather—in September’s case, Hurricane Ida. The Federal Reserve attributed 0.6 points of the decline to the storm.

The September results are the steepest decline in industrial production since February 2020, when severe winter storms hit Texas and the Gulf Coast, leading to some extended blackouts and damage.

In addition to the September dip, the Federal Reserve adjusted its August results. After initially reporting industrial production rose 0.1 points, the adjusted figure now shows it fell by 0.4 percentage points.

Manufacturing output fell 0.7 points as motor vehicles and parts production dropped 7.2 points, thanks to shortages of semiconductor supplies. Outside vehicle manufacturing, manufacturing output dropped 0.3%.

The Fed’s index for utilities output fell 3.6 points while its mining index fell 2.3 points. Crude oil extraction, which contributes to the mining index, was suspended in the Gulf during Hurricane Ida.

Capacity utilization fell 1 point to 75.2%, 4.4 points below its 2012 average.

Despite the negative results in the short term, the outlook for industrial production’s overall growth is good. September’s results finished out the third quarter, which saw industrial production grow at an annualized rate of 4.3 points. It’s the fifth quarter in a row with an annualized production growth rate of 4 points or higher. 

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