WASHINGTON (AP) – US industrial production rebounded in October, when carmakers, stung by supply chain problems, posted significant gains and the hurricane that hit the country’s energy complex in the Gulf of Mexico ended.
Industrial production rose 1.6% last month after falling 1.3% in September, the Federal Reserve said on Tuesday. The increase was twice as large as expected.
The weakness in September reflected an acute shortage of semiconductor chips, which contributed to the collapse of automotive production, and the long-term aftermath of Hurricane Ida, which disrupted oil and gas production.
The Fed attributed roughly half of October’s earnings to a recovery from the impact of Ida, which came ashore in Louisiana on Aug. 29, causing massive shutdowns at refineries and chemical plants.
Industrial production in October was also boosted by an 11% rise in auto and parts production after a two-month slump caused by a severe shortage of semiconductors in the supply chain.
In the main industrial groups, activity in the manufacturing industry increased by 1.2%, in the mining industry, including oil and gas production, by 4.1%, and production in the country’s utilities increased by 1.2%.
Economists have warned that even with better-than-expected gains in October, production will be constrained in the coming months by continuing supply chain bottlenecks.
Andrew Hunter, senior US economist at Capital Economics, said General Motors’ decision to restart all of its North American factories this month indicates a further recovery in auto production, but not a full recovery.
“With many of these factories still operating well below capacity, and industry estimates suggest that semiconductor shortages will persist until at least next year, we expect car production to remain weak,” Hunter said.
The Fed said machinery production fell 1.3% last month, partly attributable to a strike by agricultural machinery maker John Deere.