Friday’s report showed that the manufacturing component here was only down by 0.1%, better than Bloomberg’s consensus of -0.2% for September.
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Here’s Credit Suisse’s quick preview to clients: “Factory hours worked in the September jobs report fell a steep 0.6% month-on-month”.
The figures suggest the manufacturing sector’s woes are deepening amid an economic slowdown in China and other emerging markets along with the devaluation of foreign currencies that have effectively raised the price of American goods.
“Stepping back from the monthly noise, it’s clear that manufacturing is in trouble”, Pantheon Macroeconomics chief economist Ian Shepherdson said in a note to clients. All in all it seems decent for capacity but not enough to move the needle – and well under the 80% or more that would be needed to entice big companies to go build more plants and buy up massive amounts of new capital equipment.
“In 2015 it has been one thing after another hammering manufacturing in nearly everything except motor vehicles”, Michael Montgomery, an economist at HIS Global Insight. That makes US products more expensive, and therefore less attractive, overseas.
Economists estimate that the capacity utilization rate was 77.3%.
Year-over-year growth reflects the softness experienced over the past 12 months, up just 0.4 percent and down from 1.1 percent the month before.
The economy still appears to be expanding, though at a subdued pace, due to spending by US consumers, an improving housing market and continued gains in the jobs market. Industrial production rose at an annual rate of 1.8 percent in the third quarter. Year-over-year, the nation’s industrial activity rose a modest 0.4%. Slower growth and low inflation have diminished expectations of an interest rate hike from the Fed this year.
The outlook for manufacturing isn’t entirely gloomy.
All in all, weak exports continue to plague industries in America, and a weak oil sector only means ever more weakness to be expected from the USA energy sector, which had been such a bright spot. Output of business equipment and construction supplies declined.
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Warmer-than-usual temperatures in September led to a 1.3% increase in the output of utilities.
