Industrial production data was disappointing but only adds to inflation pressures.

We have been expecting industrial production to grow at an accelerating pace, as companies increase output to meet high levels of current demand and rebuild depleted inventories. That did not happen in September. The large 1.3% drop in production only adds to inflation pressures as demand far exceeds the supply of goods. Part of the drop was a function of weather events which shut down production for long periods. Hurricanes, floods and wildfires did limit output during September but that does not fully explain the large drop. Certainly, supply chain problems where manufacturers are limited by the lack of parts, materials and workers also played a part in the decline.