U.S. manufacturing production rose at a solid pace in October, marking the sixth straight advance as factories continued to recover from the depths of the pandemic-driven lockdowns earlier this year.
Output at factories increased 1% from the prior month, matching the median forecast in a Bloomberg survey of economists, after an upwardly revised 0.1% gain in September, Federal Reserve data showed Tuesday. Total industrial production, which also includes mining and utility output, rose 1.1% in October after a 0.4% decrease a month earlier.
The October gain in factory output was broad-based with increased production of consumer goods, business equipment and construction supplies that indicates a solid start to the fourth quarter. While output continues to improve against a backdrop of lean inventories and steady demand, supply chain disruptions and capital investment cutbacks remain challenges for the industry.
Despite the improvement last month, the Fed’s index of manufacturing remains about 5% below its level in February.
The Fed report follows several other measures that have pointed to steady improvement in the manufacturing sector. The Institute for Supply Management’s manufacturing gauge rose to the highest since 2018 last month, as a measure of new orders surged to a 16-year high.
Meanwhile, employment and average hours worked in the sector also increased in October, according the government’s monthly jobs report.
Manufacturing capacity utilization picked up to 71.7% from 71%, while total capacity utilization, including factories, mines and utilities, increased to 72.8% from 72%. Even with recent improvement, the overall plant-use rate is well below the 76.9% seen in February. Unused capacity weighs on corporate profits because capital is underutilized.
Production of motor vehicles and parts declined for a third straight month. Factory output excluding auto production increased 1.1%. Utility output rose 3.9% as an increase in electricity demand offset a decline in natural gas production.
Mining output fell 0.6% after a 1.2% advance a month earlier.
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