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Industrial Production Less Than Expected in August, the Fed Blames Hurricane Ida

Industrial production slows in August but is above pre-pandemic levels.
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Industriall Production vs Capacity 2021-08

The Fed's Industrial Production and Capacity Utilization report for August shows production increased 0.4 percent in August after moving up 0.8 percent in July.

Industrial Production Details

  • Late-month shutdowns related to Hurricane Ida held down the gain in industrial production by an estimated 0.3 percentage point. 
  • Although the hurricane forced plant closures for petrochemicals, plastic resins, and petroleum refining, overall manufacturing output rose 0.2 percent. Mining production fell 0.6 percent, reflecting hurricane-induced disruptions to oil and gas extraction in the Gulf of Mexico. 
  • The output of utilities increased 3.3 percent, as unseasonably warm temperatures boosted demand for air conditioning. 
  • At 101.6 percent of its 2017 average, total industrial production in August was 5.9 percent above its year-earlier level and 0.3 percent above its pre-pandemic (February 2020) level
  • Capacity utilization for the industrial sector rose 0.2 percentage point in August to 76.4 percent, a rate that is 3.2 percentage points below its long-run (1972–2020) average.
  • Despite an estimated drag of 0.2 percentage point due to Hurricane Ida, manufacturing output increased 0.2 percent in August and was 1.0 percent above its pre-pandemic level
  • The production of durable goods edged up in August; among its industries, the largest gain was recorded by furniture and related products and the largest loss was recorded by electrical equipment, appliances, and components. 
  • The output of nondurable goods also edged up, with gains for food, beverage, and tobacco products, for paper, and for petroleum and coal products outweighing losses elsewhere, in particular for chemicals. 
  • The output of other manufacturing (publishing and logging) rose 2.4 percent

Econoday Consensus vs Actual

  • Industrial Production: 0.4% vs Consensus 0.5%
  • Manufacturing Production: 0.2% vs Consensus 0.4%
  • Capacity Utilization 76.4% vs Consensus 76.4%

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Revisions were a mixed bag. The Fed revised July overall production lower from a 0.9% rise to a 0.8% rise but manufacturing higher from to 1.6% from 1.4%

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