Industrial Production in U.S. Drops 0.4% on Sandy Effect
Industrial production in the U.S. unexpectedly declined in October as superstorm Sandy knocked out power in the Northeast.
Output at factories, mines and utilities dropped 0.4 percent last month after a revised 0.2 percent increase in September that was smaller than previously estimated, Federal Reserve data showed today in Washington. Economists forecast a 0.2 percent gain, according to the Bloomberg survey median. The Fed said the storm cut total production by almost 1 percentage point.
American factories, a source of strength for much of the three-year expansion, face a persistent challenge from Europe’s recession and slower growth in Asia. Further cutbacks in capital spending by companies concerned about the possibility of $607 billion in automatic tax increases and spending reductions next year represent another hurdle for the industry.
“Manufacturing is still not the source of economic energy that it was earlier in the year,” said Ward McCarthy, chief financial economist of Jefferies & Co. Inc. in New York, the fourth-ranked forecaster of industrial production, according to a Bloomberg survey. “It’s a sluggish story on manufacturing. It’s not where it was.”