Auto strikes sink US manufacturing output in October

WASHINGTON (Reuters) – Production at U.S. factories dropped more than expected in October as strikes by the United Auto Workers (UAW) union against Detroit’s “Big Three” automakers depressed motor vehicle production, but manufacturing elsewhere continued to hold up.

Manufacturing output fell 0.7% last month, the Federal Reserve said on Thursday. Data for September was revised lower to show production at factories rising 0.2% instead of the previously reported 0.4%. Economists polled by Reuters had forecast factory output dropping 0.3%.

Production at factories declined 1.7% on a year-on-year basis in October.

Motor vehicle and parts output plunged 10.0% after sliding by 0.5% in September. The UAW has ended its industrial action at U.S. factories owned by General Motors, Ford and Chrysler parent Stellantis.

Excluding motor vehicles and parts, manufacturing production edged up 0.1%. Manufacturing, which accounts for 11.1% of the economy, has been hobbled by higher borrowing costs, with business spending on equipment declining in the third quarter.

Last month, there were decreases in the output of primary metals as well as furniture and related products. But production of computer and electronic products surged as did that of electrical equipment, appliances and components.

Mining output rose 0.4% after being unchanged in September. Utilities production fell 1.6% after falling 0.6% in the prior month. Overall industrial production dropped 0.6% in October after edging up 0.1% in September.

Capacity utilization for the industrial sector, a measure of how fully firms are using their resources, fell six-tenths of a percentage point to 78.9% in October. It is now eight-tenths of a percentage point below to its 1972–2022 average.

The operating rate for the manufacturing sector slipped to 77.2% from 77.8% in the prior month and is one percentage point below its long-run average.

(Reporting by Lucia Mutikani; Editing by Paul Simao)