American Factory Production Slumped in September

General Motors temporarily lays off 6,000 workers in Mexico due to strike
AFP/File JEFF KOWALSKY

U.S. manufacturing production fell in September, driven down by the strike at General Motors, falling energy prices, and sluggish global demand.

Manufacturing output fell 0.5 percent in September from the prior month, the Federal Reserve said Thursday.

Overall industrial production, which includes manufacturing, mines, and utilities, declined by 0.4 percent. Compared with a year ago, production declined 0.1 percent.

The production numbers largely confirmed the contraction in the manufacturing sector signaled by surveys such as the Institute for Supply Management’s Purchasing Managers Index and regional Fed surveys.

Somewhat softening the blow, the weaker September numbers followed a strong report for August. Both the overall production and the manufacturing figures were revised up in August, indicating that some of the production expected in September had already occurred.

Motor vehicle production fell 4.2 percent compared with a month earlier, highlighting the drag from the General Motors strike. Mining fell a steep 1.3 percent, a decline that probably also weighed on factory production because mining operations require factory-made equipment.

Perhaps more troubling for the broader economy is the decline in business equipment production, down 0.7 percent for the month and 0.8 percent on the year. Sluggish business investment has been one of the major factors giving rise to fears that the economy could slip into recession next year or the year after that.

 

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