In October, the US industrial production decreased for the second consecutive month due to a now-resolved labor strike at Boeing and the effects of two hurricanes, as reported by the Federal Reserve on Friday. The industrial output fell by 0.3% last month, following a 0.5% drop in September. The prediction had been a decrease of 0.4%, according to a survey conducted by Bloomberg.
Year-over-year, industrial production also experienced a decline of 0.3% in October. Recently, Boeing successfully negotiated a labor agreement with the International Association of Machinists and Aerospace Workers union, which represents around 33,000 workers who had been striking since mid-September.
The industrial production figures for October were further impacted by Hurricane Milton and the residual effects of Hurricane Helene. Manufacturing output decreased by 0.5% in October, following a 0.3% decline in the previous month. Durable manufacturing saw a 1.2% decrease last month, with aerospace and miscellaneous transportation equipment experiencing a significant decline of 5.8% after an 8% drop in September. Specifically, within the durable goods sector, motor vehicles and parts saw a drop of 3.1%, according to the Fed's data.
Meanwhile, nondurable manufacturing rebounded slightly by 0.1% last month; petroleum and coal products increased by 0.9%, while chemicals rose by 0.6%. Looking ahead, October's industrial production may benefit from the resolution of the Boeing strike and diminishing hurricane effects, although the output of motor vehicles and parts is anticipated to take longer to recover, as mentioned by Bernard Yaros, Lead US Economist at Oxford Economics, in a statement sent to MT Newswires. In terms of mining output, a rise of 0.3% was noted last month, as declines in coal mining were balanced out by a partial revival in oil and gas extraction following hurricane-related disruptions in September.
Utilities output rose by 0.7% in October, compared to a 0.3% increase in the month prior. Capacity utilization fell to 77.1% in October, down from 77.4% in September. In recent news, Donald Trump secured victory over Kamala Harris in the 2024 US presidential election, indicating his comeback to the White House.
"The implications from the election are greatest for the industrial production outlook in 2026 and beyond," highlighted Yaros. He further stated that in 2026 and 2027, industrial activity is expected to pick up due to renewed business tax incentives and increased military expenditure, although a slowdown is anticipated in 2028 as the fiscal stimulus wane and manufacturers face retaliatory tariffs from major trading partners..