US industrial production rose by 0.4 per cent month-on-month and 2.8 per cent year-on-year in September, topping the market consensus forecast of 0.2 per cent monthly gain. The previous month's reading was revised lower to -1.4 per cent from -1.2 per cent.

Capacity utilisation was in line with the market consensus, rising to 78.3% from the previous month's revised reading of 78.0% (revised from 78.2%).

Looking at major market groups, the production of consumer goods was unchanged after having fallen 1.5% in August. The output of business equipment rose 0.8% (-0.9%), construction goods rose 1.3% (0.1%) and materials production rose 0.4% (-1.6%).

In terms of major industry groups, manufacturing production rose 0.2% monthly after having fallen 0.9% in August. Mining output rose 0.9% (-1.6%) and the output of utlities rose 1.5% (-4.3%).

"This upside surprise was tempered by a downward revision to August," explained Peter Newland of Barclays Research.

"All in all, a clearly soft Q3 for the manufacturing sector - in the quarter as a whole output declined by an annualised 0.9% q/q. However, September retail and vehicle sales data provide encouraging signs that final domestic demand picked up to some extent towards the end of Q3, which should translate into a rebound in production during Q4."

FM

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