U.S. industrial production plunges in September

U.S. industrial production plunges in September

US industrial production fell a staggering 1.3 percent in September, the biggest drop in 23 years. Industrial production had been expanding steadily since May until Hurricane Katrina hit in August and Rita a few weeks later. The hurricanes idled oil rigs and refineries on the Gulf Coast, an area which accounts for 30 percent of domestic oil output and half of the nation’s refining capacity. Manufacturing fell 0.5 percent after a 0.3 percent increase in August, according to the US Federal Reserve. Mining, which includes oil and gas production, fell 9.1 percent while utility output fell 0.9 percent. Auto production rose 3.3 percent in September, compared to a 5.5 percent increase in August. Many other areas of the country, however, have actually increased productions because of the hurricanes. Consumer goods production excluding autos rose 0.2 percent after remaining flat in August. Also, prices paid by consumers increased 1.2 percent in September, after a 0.5 percent increase in August. Excluding energy and food, core prices increased 0.1 percent, the same core price increase as August. Federal policy makers are mostly concerned about the increased risk of inflation, as is evidenced in recent reports and speeches. Federal Reserve Governor Donald Kohn said on October 11, that while inflation is contained for now, “there is a risk that it could go higher, and that's what we are particularly focused on right now.”