This post was originally published on this site
A Ford Motor Company worker works on a new truck at a plant in Dearborn, Michigan.
The numbers: U.S. industrial production dropped 0.8% in October, the largest decline since May 2018, the Federal Reserve reported Friday. It was the third decline in output in the past four months. The drop was steeper than Wall Street expectations of a 0.5% fall.
The report was impacted by the United Auto Workers strike at General Motors GM, +0.43% , which pushed down auto production by 7.1%.
The weakness was not limited to auto manufacturing though. Excluding autos, industrial production was down 0.5%.
Manufacturing output fell 0.6% in October. Manufacturing ex-autos in October was down 0.1%.
Industrial capacity in use slumped to 76.7 in October. That’s the lowest level in 25 months.
What happened: No sector showed a gain in output.
Mining output, which has been a driver for growth, fell 0.7% in October. That’s the third decline in the past four months. Utility production slumped 2.6% after a sharp rise in the prior month.
On a year-on-year basis, U.S. industrial production is down 1.1%.
Big picture: The manufacturing sector is being hit hard by several headwinds, including weak global demand, uncertainty over international trade policy and the woes at Boeing Co. Some economists had detected a trough in the manufacturing sector but this report belies that impression.
Fed Chairman Jerome Powell told lawmakers this week that his economists are watching closely to see if weakness in the manufacturing sector spills over into the consumer side of the economy. But the October retail sales data, released earlier Friday, was generally positive.
Market reaction: Stocks DJIA, +0.31% were set to open higher on Friday as investors digested the retail sales data.