US industrial output rises, but momentum slowing

US industrial production increased for a fourth straight month in September, boosted by gains in manufacturing and mining output, but momentum slowed sharply in the third quarter.

The Federal Reserve said on Tuesday industrial production rose 0.3 percent last month after an unrevised 0.4 percent increase in August. Industrial output grew at a 3.3 percent annualized rate in the third quarter after accelerating at a 5.3 percent pace in the second quarter.

The Fed said industrial output in September had been held down “slightly” by Hurricane Florence, which drenched South and North Carolina in mid-September. The US central bank estimated the impact of the storm on industrial production as “less than 0.1 percentage point.”

Manufacturing output increased 0.2 percent in September, the smallest gain in four months, after rising 0.3 percent in August. A 1.7 percent increase in motor vehicle production helped to lift manufacturing output last month. Motor vehicle production surged 4.3 percent in August.

There were also strong increases in the production of primary metals, machinery and wood products.

US financial markets were little moved by the data.

Manufacturing, which accounts for about 12 percent of the economy, is being supported by a strong domestic economy. Momentum is, however, slowing against the backdrop of a strong dollar and cooling global growth, which is restraining exports.

There are so far few signs that the Trump administration's “America First” policies, which have left the United States embroiled in a bitter trade war with China, are disrupting factory production.

But manufacturers are increasingly complaining that the tit-for-tat trade tariffs between Washington and Beijing are disrupting supply chains, which could hurt future production.

The sector is also facing a shortage of skilled workers, especially truck drivers, which is causing delivery delays and also contributing to the supply chain bottlenecks.

Manufacturing output increased at a 2.8 percent rate in the third quarter after growing at a 2.3 percent pace in the April-June period. Mining production increased 0.5 percent in September, adding to the 0.4 percent rise in August. Oil and gas well drilling, however, fell for a third straight month in September.

Mining output grew at an 11.4 percent rate in the third quarter after notching a 16.5 percent pace in the second quarter. The sector has rebounded about 24 percent from its trough in 2016.

Utilities output was unchanged in September after surging 1.1 percent in the prior month. A surge in natural gas output was offset by a decline the production of electricity.