US auto worker strike hits October industrial production

US auto worker strike hits October industrial production

The Fed said a decline in manufacturing output was largely driven by recent strike action by US auto workers
The Fed said a decline in manufacturing output was largely driven by recent strike action by US auto workers. Photo: Patrick T. Fallon / AFP/File
Source: AFP

US industrial production declined more than expected in October, with the auto workers strike exerting downward pressure on a range of market groups, the Federal Reserve said Thursday.

The United Auto Workers (UAW) union called off a sprawling six-week strike late last month after reaching agreement with Detroit's "Big Three" automakers over better pay and working conditions.

US industrial production fell 0.6 percent in October from a revised 0.1 percent rise in September, the US central bank announced in a statement.

This was below the median expectation of economists surveyed by MarketWatch.

Manufacturing output, which declined by 0.7 percent, was dragged down by "a 10 percent drop in the output of motor vehicles and parts that was affected by strikes at several major manufacturers of motor vehicles," the Fed said.

"Industrial production was harder hit by the UAW strike than either we or the consensus anticipated," Oxford Economics lead US economist Bernard Yaros wrote in a note to clients.

Read also

Walmart narrowly lifts forecast as inflation stays consumer concern

Among the major market groups, output was mixed, with the impact of strike action "exerting downward pressure on a number of categories," including the index for consumer durables, which fell 5.8 percent.

Meanwhile, the output of business equipment moved down 0.5 percent, "because of a drop in the transit component," while the index for defense and space equipment recorded its 10th consecutive monthly rise, according to the Fed.

Looking ahead, industrial production is forecast to decline this quarter and the next, Yaros from Oxford Economics said.

He said tighter lending standards would likely hold back business investment, while the higher dollar could hurt exports, and the high interest rate environment is acting to "undermine consumer spending on discretionary goods."

Source: AFP

Authors:
AFP avatar

AFP AFP text, photo, graphic, audio or video material shall not be published, broadcast, rewritten for broadcast or publication or redistributed directly or indirectly in any medium. AFP news material may not be stored in whole or in part in a computer or otherwise except for personal and non-commercial use. AFP will not be held liable for any delays, inaccuracies, errors or omissions in any AFP news material or in transmission or delivery of all or any part thereof or for any damages whatsoever. As a newswire service, AFP does not obtain releases from subjects, individuals, groups or entities contained in its photographs, videos, graphics or quoted in its texts. Further, no clearance is obtained from the owners of any trademarks or copyrighted materials whose marks and materials are included in AFP material. Therefore you will be solely responsible for obtaining any and all necessary releases from whatever individuals and/or entities necessary for any uses of AFP material.

Online view pixel