US: Industrial sector remains under pressure – Wells Fargo

Data released today showed Industrial Production dropped 0.4% in September.   Analysts at Wells Fargo, point out that while the General Motors strike held down production, manufacturing outside the auto industry continues to slow and suggest that the industrial sector remains under pressure.  

Key Quotes:  

“Activity in the industrial sector slowed in September, with total production down 0.4%. The slowdown was broad-based with only a weather-related 1.4% jump in utilities output, as last month tied 2015 as the second warmest September on record. Gains there helped offset some of the slowdown, but weakness in mining and manufacturing weighed on overall activity. Mining production was down 1.3% in September, pushing mining output down 4.4% at an annual rate in Q3; the first quarterly decline in three years.”

“Manufacturing output declined 0.5%, led by a 4.2% drop in motor vehicles & parts production, due to the United Auto Workers (UAW) strike from General Motors (GM).”

“Looking past the GM-related impact, weakness hasn’t just been tied to the auto sector. Manufacturing excluding motor vehicles & parts declined 0.2% in September, suggesting the slowdown in manufacturing continues.”

“As trade tensions persist, the manufacturing sector continues to be under pressure, and headwinds from the trade war and slower global growth will likely continue to weigh on activity.”