Even without the GM strike, the US manufactring sector was still soft in October, the Fed said (Eleonore SENS)

Washington (AFP) – The nationwide strike at General Motors walloped American industry last month, causing the biggest tumble in factory output in a year and a half, the Federal Reserve reported Friday.

But even without the strike, the American manufacturing sector’s sharp decline persisted, with durable goods and electrical appliance makers continuing to feel the sting of President Donald Trump’s trade war with China.

The Fed’s Industrial Production index fell 0.8 percent in October, twice the decline economists had been expecting, largely due to a 7.1 percent plunge in auto manufacturing caused by the strike.

The drop in production was the biggest since May of last year. Levels for July, August and September were all revised up slightly but nevertheless remained in the red.

Nearly 50,000 GM workers walked off the job nationwide in mid-September, staging a six-week strike, the longest work stoppage to hit the automaker in decades.

Even excluding the strike, however, the index still lost 0.5 percent, with all major categories, including utilities, construction, business equipment and mining — an industry group that includes the oil sector, which has been hit by low prices — posting declines.

The GM strike also sent the manufacturing index tumbling by 0.6 percent as well, its largest decline since April of this year. But, excluding the strike, manufacturing still declined by 0.1 percent, according to the Fed.

Meanwhile, factory capacity in use fell eight tenths of a point to 76.7 percent, the lowest level since September of 2017. 

Manufacturing capacity fell a half of a percentage point to 74.7 percent, the lowest in more than two years.

Ian Shepherdson of Pantheon Macroeconomics said in a client note that November should see a rebound, as utilities are due to rise along with the auto sector.

But the fourth quarter as a whole “looks even money to see the third decline in the past four quarters,” he said.

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.