MNI DATA PREVIEW: IP to Rise as Hurricane Recovery Continues

By Sara Haire and Holly Stokes

HIGHLIGHTS:

-Industrial production to rise 0.5% and capacity utilization to increase to

76.3% as hurricane recovery continues.

-Mining to slow after September's solid 0.4% recovery.

-Analysts divided on expectations for utilities, with weekly electricity figures

pointing to a gain but October's mild weather a possible drag.

-ISM manufacturing and factory hours worked suggest strength in manufacturing.

     WASHINGTON (MNI)- October industrial production is expected to rise 0.5%,

as capacity utilization ticks up to 76.3%, an MNI survey of analysts shows. 

     Analysts expect October industrial production to post a solid gain, as

recovery from hurricane disruption continues. While September did increase 0.3%,

after August's 0.7% fall, the Fed noted that September was still held down by

0.25pp due to hurricane effects. Analysts now expect a continued recovery and

stronger gain for October, with forecasts ranging from an increase of 0.3% to

1.0%. 

     In September, mining saw a relatively stable gain of 0.4% following a

decline in August. Mining was up 9.8% y/y, indicating a definitive rebound

partially due to post-hurricanes. However, with the rig count lowered, analysts

are expecting that oil production slowed in the month. Capital Economics claims

the resurgence in drilling activity earlier may be gradually reversing, thus

causing the mining output to see a decline. 

     Expectations for utilities are mixed, with analysts divided as to whether

the category will be able to lift up industrial production. Last month,

utilities rose 1.5%, and many analysts expect it to strengthen further - with

Capital Economics looking to weekly electricity figures as evidence that

utilities will post a 3% gain. However, BMO claims that October's relatively

warm temperatures created less need for heating, without pushing up air

conditioning - resulting in a potential drag to utilities. 

     Manufacturing production is expected to be a source of strength, boosting

industrial production. Analysts such as Morgan Stanley look to the strong ISM

manufacturing report, and the fact that aggregate factory hours worked saw their

biggest monthly increase in almost three years, as evidence of a strong gain in

manufacturing production. 

--MNI Washington Bureau; +1 202-371-2121; email: holly.stokes@marketnews.com

--MNI Washington Bureau; +1 212-800-8517; email: sara.haire@marketnews.com

[TOPICS: MAUPR$,M$U$$$]