Monday Economic Report: Manufacturing Production Rebounded in October, Rising 1.2%

AICC, through its membership in the Council of Manufacturing Associations, is pleased to present the "Monday Economic Report" from the NATIONAL ASSOCIATION OF MANUFACTURERS (NAM).

By Chad Moutray, Ph.D., CBE – November 22, 2021

NAM Weekly Economic Toplines: 

After pulling back in August and September on supply chain disruptions, manufacturing production rebounded in October, rising 1.2%. Output in the auto sector, which has been challenged by the chip shortage and supply chain issues, bounced back 11.0% in October after falling 3.0% and 7.1% in August and September, respectively. Manufacturing capacity utilization jumped from 75.8% in September to 76.7% in October, the strongest since January 2019. Overall, manufacturing production has risen 4.5% year-over-year, with a 1.2% increase relative to February 2020’s pre-pandemic pace. Looking at manufacturing sectors with the largest production gains year to date, the aerospace and miscellaneous transportation equipment sector had the largest gains (up 11.7%). The standout on the below chart, however, is computer and electronic products (up 8.8% year to date, or 32.9% since the beginning of 2015). The New York and Philadelphia Federal Reserve Banks both reported accelerating activity in their November manufacturing surveys, with a strong outlook for the coming months despite highly elevated delivery times and pricing pressures. In the Philadelphia Federal Reserve release, respondents predict 5.3% growth in prices for the goods and services that they sell over the next four quarters, with compensation rising 4.8%. At the same time, growth in manufacturing activity slowed in the Kansas City Federal Reserve’s district, with new orders contracting for the first time since May 2020. The sample comments once again noted supply chain and logistics constraints, workforce shortages and rising input costs. Retail sales soared 1.7% in October, an encouraging sign that consumer spending continues to rebound despite concerns about higher prices and lingering supply chain disruptions. New residential construction activity declined 0.7% to 1,520,000 units at the annual rate in October, falling for the third time in the past four months. The housing market has been challenged this year by rising construction costs, affordability issues and difficulties in finding workers. Indeed, single-family housing starts dropped 3.9% to a 15-month low in October. With that said, builders remained optimistic about growth over the coming months, with sentiment moving higher in the latest NAHB Housing Market Index despite ongoing concerns. Along those lines, housing permits rose 4.0% from an annualized 1,586,000 units in September to 1,650,000 units in October. Single-family and multifamily permits increased 2.7% and 6.6% in October, respectively, rebounding from declines in the prior release. READ REPORT