Implications:  Don’t get too worried about the recent weakness in industrial production; output has been held back by temporary factors that should mostly be behind us. The Federal Reserve estimates that the Boeing strike held down total IP growth by 0.2 percentage points in October, and the lingering effects of two hurricanes subtracted an additional 0.1 points, as well.  As a result, we should see some catch up growth going forward. Looking at the details in today’s report, the weakness was concentrated in manufacturing, with activity falling 0.5%.  Production in the volatile auto sector dropped 3.1% while non-auto manufacturing (which we think of as a “core” version of industrial production) posted a more modest decline of 0.3% in October.  The only bright spot in this “core” measure came from production in high-tech equipment which rose 0.6% in October, likely the result of investment in AI as well as the reshoring of semiconductor production.  High-tech manufacturing is up at a 10.0% annualized rate in the past three months and 7.6% in the past year, the fastest for any major category.  The mining sector was also healthy in October, rising 0.3%.  Higher production of oil and gas more than offset a decline in the drilling of new wells and the extraction of other minerals and metals.  Finally, the utilities sector (which is volatile and largely dependent on weather) also posted an increase in October, rising 0.7%.  In other manufacturing news this morning, the Empire State Index, which measures manufacturing sentiment in the New York region, surged unexpectedly to +31.2 in November from -11.9 in October.

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