Labour dispute: A Boeing assembly plant in Renton, Washington. After a 53-day walkout, the firm’s workers agreed to a new labour contract earlier this month. — Reuters
Washington: US industrial production declined in October as the impact from a Boeing Co machinists’ strike and a pair of hurricanes reverberated through manufacturing for a second month.
The 0.3% decline in output at factories, mines and utilities followed a revised 0.5% decrease a month earlier, US Federal Reserve (Fed) data showed last Friday.
Manufacturing output, which accounts for about three-fourths of total industrial production, slid another 0.5%, after a revised 0.3% drop the previous month.
Mining and energy extraction rose 0.3%, while output at utilities climbed 0.7%, the most in four months.
A 53-day walkout by Boeing workers crippled aircraft production before union members agreed to a new labour contract earlier this month.
The company delivered just 14 jetliners in October, the fewest in nearly four years.
The result, according to the Fed’s latest industrial production report, was a 5.8% plunge in the output of aerospace equipment last month on top of an 8% decline a month earlier.
After suppressing industrial output in September, Hurricanes Milton and Helene continued to weigh on activity last month.
Together, these storms reduced October industrial production by 0.1 percentage point.
The Fed also said the strike reduced industrial production by a combined 0.5 percentage point in both September and October.
The aircraft sector’s downturn exaggerates the more general malaise in US manufacturing as elevated borrowing costs, a pause in some capital spending plans and tepid growth in overseas economies make it difficult for production to gain much traction.
While easier Fed monetary policy may help free up capital outlays, businesses still face an uncertain industrial policy path as President-elect Donald Trump threatens tariffs to help reshore more domestic production.
A separate report from the New York Fed showed a gauge of factory activity in New York surged to an almost three-year high.
The data included a sharp pickup in orders growth that suggests companies are trying to get ahead of possible tariffs as well as the threat of a port strike in January.
The industrial production report showed lower output of motor vehicles, tumbling 3.1% for October – the third decrease in the past four months.
Output of business equipment dropped for a second month, reflecting the slide in aeroplane manufacturing.
Capacity utilisation at factories, a measure of potential output being used, fell to 76.2%, the lowest since March 2021.
Overall industrial capacity also decreased. Meanwhile, US consumer demand stayed resilient.
A report earlier last Friday showed retail sales advanced in October, boosted by a jump in auto purchases, while other categories signalled some momentum entering heading into the holiday season. — Bloomberg
