2019.10.1713:57:00UTC+00U.S. Industrial Production Drops More Than Expected Amid GM Strike

With the strike at General Motors (GM) contributing to a drop in manufacturing output, the Federal Reserve released a report on Thursday showing a bigger than expected drop in industrial production in the month of September.

The Fed said industrial production fell by 0.4 percent in September after climbing by an upwardly revised 0.8 percent in August.

Economists had expected production to edge down by 0.1 percent compared to the 0.6 percent increase originally reported for the previous month.

Manufacturing output dropped by 0.5 percent in September after rising by 0.6 percent in August, with the production of motor vehicles and parts plunging by 4.2 percent.

The report also said mining output tumbled by 1.3 percent in September after spiking by 2.4 percent in August, while utilities output jumped by 1.4 percent after inching up by 0.2 percent in the previous month.

"Overall, after a couple of months of surprisingly strong manufacturing output, the drop back last month is hardly a surprise, particularly with the GM strike," said Paul Ashworth, Chief US Economist at Capital Economic.

He added, "Unfortunately, the deteriorating survey evidence suggests that weakness will extend for some time to come."

The Fed said capacity utilization for the industrial sector dropped to 77.5 percent in September after climbing to 77.9 percent in August. Capacity utilization had been expected to dip to 77.7 percent.

Capacity utilization for manufacturing and mining decreased to 75.3 percent and 88.9 percent, respectively, while capacity utilization for utilities rose to 77.7 percent.