Milestone: Industrial production reached pre-pandemic levels

·2 min read

Data: FRED; Chart: Axios Visuals

Industrial production joins metrics like GDP and consumer spending that have returned to and surpassed pre-pandemic levels.

Why it matters: The pandemic has caused a wide array of disruptions that have gummed up the links along the supply chain. The fact that industrial production still continues to grow suggests the supply chain, while troubled, is at least improving.

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By the numbers: Industrial production rose by 0.4% in August month over month, according to Federal Reserve data released Wednesday.

  • While this was below expectations for 0.5% growth, the level of activity was above pre-pandemic levels.

Between the lines: “Late-month shutdowns related to Hurricane Ida held down the gain in industrial production by an estimated 0.3 percentage point,” the Federal Reserve noted.

What they’re saying: “Even with the hurricane-related disruptions in August and continued supply chain issues in the auto sector, overall manufacturing output has been able to climb at a solid rate on net in recent months,” JPMorgan economist Daniel Silver wrote.

State of play: We recently learned U.S. manufacturers had a backlog of unfilled orders worth $1.2 trillion, as businesses invest in growth and replenish their inventories.

  • “Growth in manufacturing going forward is likely to be supported by low inventories,” HFE chief U.S. economist Rubeela Farooqi says.

Yes, but: “With the Delta variant causing renewed disruption to global supply chains and Hurricane Ida weighing on oil production, a further slowdown looks likely in September,” says Andrew Hunter, Capital Economics senior U.S. economist.

What to watch: Regional manufacturing surveys will offer updated views on what’s going on in America’s factories.

  • The Empire State manufacturing survey, the first of the regional surveys, unexpectedly showed a significant jump in activity in September.

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