The Federal Reserve’s Industrial Production and Capacity Utilization report for October came in better than expected, showingbgrowth across the board.
Industrial Production increased 1.6% in October after declining 1.3% in September. This was a sharper growth rate than expected, with economist estimates set at 0.8% growth. About half of this growth was attributed to recovery from the effects of Hurricane Ida.
Meanwhile, Capacity Utilization rose to a reading of 76.4% in October, following September’s decline to 75.2% and against estimates for an October reading of 75.9%. Excluding motor vehicles and parts, Capacity increased 0.6%.
Transit
As Covid cases and measures continue to lessen (and as treatment options expand), production of transit-related goods has picked up. After a two-month losing streak, industrial production related to transit increased 5.3%.
Consumer Goods
The index for Consumer Goods increased 1.4% as Durable Goods (+4.9%) outweighed Nondurables (+0.4%). Automotive products increased 9.7% and were the main driver within the Durable goods index within Industrial Production. Energy production also picked back up in October as well, increasing 1.9%.
Holiday Shopping
The holiday shopping season is starting earlier this year. This trend showed earlier today in the Retail Sales report via higher than expected spending and again in this report as production of Home Electronics bounced back with a 1.1% increase in October, while clothing increased - albeit at a slower rate - 0.3%.
Semiconductors
Production of semiconductors increased for the second straight month in a row, increasing 1.8% in October, following a 1.0% rise in September. This is encouraging for investors as the semiconductor shortage has stubbornly remained throughout the pandemic and any signs that it is being alleviated is certainly a good development.
