WASHINGTON, Oct 17 (Reuters) - U.S. industrial production barely rose in September as a rebound in manufacturing output was offset by a decline in utilities production, suggesting a moderate acceleration in economic growth in the third quarter.
The Federal Reserve said on Monday industrial output edged up 0.1 percent last month after a downwardly revised 0.5 percent decline in August.
Economists polled by Reuters had forecast industrial production gaining 0.1 percent last month after a previously reported 0.4 percent fall in August. Industrial production rose at an annual rate of 1.8 percent in the third quarter, the first quarterly increase since the third quarter of 2015.
The industrial sector continues to be hobbled by the lingering effects of the dollar’s surge and oil price plunge between June 2014 and December 2015. The sector has also been hurt by business efforts to reduce an inventory overhang, which has resulted in fewer orders being placed with factories.
But with the dollar’s rally fading and oil prices stabilizing, the worst of the industrial downturn is probably over. A survey early this month showed an acceleration in factory activity in September, while new orders for manufactured capital goods have increased since June.
Manufacturing output rose 0.2 percent in September after falling 0.5 percent in the prior month. Motor vehicle and parts production edged up 0.1 percent. Manufacturing production rose at a 0.9 percent rate in the third quarter.
Mining production increased 0.4 percent as gains in oil and gas well drilling offset a drop in crude oil extraction. That left mining output rising at a 3.7 percent rate in the third quarter following six consecutive quarterly declines.
Utilities production dropped 1.0 percent last month after slipping 0.3 percent in August.
With output barely rising last month, industrial capacity use edged up 0.1 percentage point to 75.4 percent. Officials at the Fed tend to look at capacity use as a signal of how much “slack” remains in the economy and how much room there is for growth to accelerate before it becomes inflationary. (Reporting By Lucia Mutikani; Editing by Andrea Ricci)