U.S. industrial production rose by 0.7% in September, surpassing the anticipated 0.4% increase. The previous figure was revised from 0.0% to 0.1%. Capacity utilization reached 76.9%, higher than the expected 76.5%. Manufacturing output remained steady, also rising by 0.3%, matching expectations, with the prior figure adjusted from -0.3% to -0.2%.
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In sector contributions, mining output increased by 0.2%, while utilities surged by 3.5%. Specific gains in manufacturing included a 1.4% rise in machinery, 1.6% in primary metals, 1.3% in electrical equipment, and 1.0% in chemicals. The significant monthly uplift in utilities was driven by a 3.7% increase in electric utility output, which is 9.6% higher year-over-year, and an operating rate boost of 2.3 points to 73.8%. This increase may be influenced by weather, but the consistent year-over-year trend aligns with data center energy load. Utilities saw a 14.8% annualized growth rate in Q3.
The manufacturing sector presents a mixed picture. Semiconductor output rose by 2.1% month-over-month and 19.9% year-over-year, contributing heavily to a 3.8% rise in durable goods, with an annualized growth rate of 28.4% in Q3. Excluding high-tech sectors, factory output saw only a 0.2% month-over-month increase and a mere 0.7% year-over-year gain.
However, motor vehicles and parts faced a decline of 3.0%, with vehicle assemblies falling to an annual rate of 10.21 million from 10.61 million in August and 11.0 million in May. Without the automotive sector, manufacturing output rose by 0.5%.
Analysts suggest that while the high-tech sector continues to thrive, challenges remain for broader economic conditions, particularly in the manufacturing sector outside technology. Rising interest rates, intended to combat inflation, may negatively impact overall economic growth, including struggling sectors such as motor vehicles. There are calls for a more balanced approach, leaning towards fiscal measures rather than relying solely on monetary policy.