- U.S. industrial production plunged in October at the fastest rate in a year-and-a-half.
- GM strike exacerbated the decline following a six-week work stoppage.
- The manufacturing sector remains in a recession that could spill over to the rest of the economy.
U.S. industrial production plunged in October at the fastest rate in a year-and-a-half, further underscoring the nation’s manufacturing downturn at a precarious time in its ongoing trade negotiations with China.
The decline was much worse than expected due to a six-week work stoppage at General Motors that likely cost the auto manufacturer $3 billion. But even if we control for the GM strike, America’s productive economy has been in a downward spiral for decades.
U.S. Industrial Production Plummets
In its monthly report on industrial production, the Federal Reserve announced Friday that output at American factories fell 0.8% in October against expectations of a 0.4% drop. It was the worst monthly decline since May 2018. On an annualized basis, industrial production was down 1.1%.
Industrial production is the widest measure of factory output, capturing trends at manufacturing companies, mines and utility providers.
Fed data showed a 0.6% drop in manufacturing output from September and a 1.5% decline over year-ago levels. Much of that decline was attributed to a slumping automotive industry after workers at General Motors walked off the job. Output of motor vehicles and parts fell 7.1%.
Overall, manufacturing production has declined in three of the last four months.
Meanwhile, mining output declined 0.7% in October but was up 2.7% annually. Utilities fell 2.6% from September and 4.1% annually, official data showed.
Trade War Knocks Manufacturers Off Course
Although manufacturing’s share of GDP and employment has declined throughout the decades, it still represents a critical component of the U.S. economy. Latest PMI data from the Institute for Supply Management (ISM) suggest U.S. manufacturers are…