The goods producing sector had a poor September. Following an unrevised 2.6 percent monthly surge in August, output fell a larger than expected 1.6 percent, its steepest drop since last December. The reversal reduced annual production growth from 4.5 percent to 3.5 percent, a 3-month low.
Outside of construction (0.4 percent) all of the major subsectors posted monthly losses. The worst performer was energy (4.3 percent) ahead of capital goods (2.7 percent) and intermediates (0.8 percent). Consumer goods were down 0.3 percent while overall manufacturing matched the headline 1.6 percent decline.
September's setback left third quarter industrial production 0.9 percent above its level in the second quarter when it rose 1.9 percent. However, the slowdown here was attributable to the more volatile subsectors and, over the same period, manufacturing output expanded 1.7 percent, up from an already impressive 1.5 percent in April-June.
With yesterday's September orders data showing plenty of demand already in the pipeline, fourth quarter industrial production should continue to rise at a healthy rate and make a more than useful contribution to real GDP growth.