WASHINGTON -- Hurricane Sandy appears to have done a lot more economic damage than many experts thought.
The Federal Reserve said Friday that manufacturing production fell across almost all major industries in October – a drop officials blamed on the storms that struck the Northeast late last month.
Even with mining activity growing and utility output holding steady, industrial production overall slid 0.4% last month. The Fed thinks Sandy knocked nearly a full percentage point off total production after increasing 0.2% in September.
The report surprised analysts, but it comes on the heels of other economic data pointing to Hurricane Sandy’s effects: Retail sales fell across most segments last month, and unemployment claims saw a huge spike last week, suggesting that job growth for October may also turn out weaker than expected.
U.S. manufacturing once powered the economic recovery, but more recently has been flattened by a slowdown in global growth and domestic business investments. With Hurricane Sandy adding to the woes, production at apparel, food and machinery factories dropped sharply last month.
The decline in manufacturing, plus a falloff in retail sales and other disruptions caused by the storms, could take a bite out of the nation’s already slow economic growth forecast for the fourth quarter.
The good news is that any weather-related drag will be followed by a bump-up in production and economic activity as companies recover and rebuilding efforts begin. The bad news: Any such rebound, too, is likely to be just temporary and won’t, by itself, energize the manufacturing sector for very long.
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