Fleet Management

Economic Watch: Industrial Production Jumps, Jobless Claims Plummet

October 16, 2014

By Evan Lockridge

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Photo: Evan Lockridge
Photo: Evan Lockridge

Industrial production in the U.S. increased 1% in September, the biggest gain in nearly two years and advanced at an annual rate of 3.2% in the third quarter of 2014, roughly its average quarterly increase since the end of 2010, according to a Federal Reserve report released Thursday.

In September, manufacturing output moved up 0.5%, while mining and utilities climbed 1.8% and 3.9%, respectively. For the third quarter as a whole, manufacturing production rose at an annual rate of 3.5% and mining output increased at an annual rate of 8.7%. The output of utilities fell at an annual rate of 8.5% for a second consecutive quarterly decline.

Total industrial production in September was 4.3% above its level of a year earlier. The capacity utilization rate for total industry moved up 0.6 percentage point in September to 79.3%, a rate that is 1.0 percentage point above its level of 12 months earlier but 0.8 percentage point below its long-run average from 1972 to 2013.

Meantime, separate report from the U.S. Labor Department showed first-time applications for unemployment benefits unexpectedly fell last week to 264,000, its lowest level since April 2000. Also, the four-week average of claims fell, hitting its lowest level since June 2000.

“While impressive, we must remember this is a weekly figure which tends to be volatile, and claims have been declining for several months now, but that hasn't yet translated into high-wage, full-time employment,” said Sterne Agee Chief Economist Lindsey Piegza.

Both reports follow one Wednesday from the Federal Reserve that said the U.S. economy is growing at a modest pace.

Federal Reserve districts reporting on transportation services generally noted growth in this sector, with a few pointing to capacity constraints in railroads, trucking, or both.

“The Atlanta district reported increased railroad shipments and strong trucking freight demand. Contacts at trucking firms and railroads in the Cleveland district noted that insufficient capacity is a major issue that is currently confronting the industry,” said the Federal Reserve. “In the Minneapolis district, capacity constraints in freight rail have increased demand for trucking services and led to increased stockpiles at some iron ore production facilities. A trucking firm in the Kansas City district cited supply chain disruptions and new regulations as having slowed freight traffic. Dallas noted that air cargo volumes continued their upward trend, and Richmond indicated that activity remains strong at district ports. St. Louis reported some expansion plans for freight firms.”

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