Industrial production stalls in September

Industrial production fell a disappointing 0.2% in September, the first decline in over a year and behind the Bloomberg estimate of a positive 0.2%. Production has now been up by 0.2% or less in three of the last four months.  Capacity utilization slipped from 74.8% to 74.7%.

The skinny
Industrial production, which encompasses manufacturing, has been the lone bright spot in what has otherwise been a weak economic recovery, as strong gains in the early stages of the rebound helped to replace warehouses left bare by the near shuttering of production in the U.S. and around the globe.

But the inventory rebuilding cycle is fading, as inventories are back near levels seen over much of the last decade (based on current sales).

Rising global demand is helping to support production, but significant new gains are going to have to come from increased demand at home.