[Kajian Post] Sandy Effect

Oleh: Tifani Putri Safira | Trainee Divisi Kajian Kanopi 2012 | Ilmu Ekonomi 2012

Hurricane sandy happened last month in US. It caused big flood and damage some facilities, including electricity for more than 8 millions home. Sandy killed more than 100people, disputed rail and subway service. In addition, Sandy also affects US industrial production by disrupted output of goods from food to chemical.

Industrial production unexpectedly fell in October as Sandy happened. Production at factories, mines, and utilities dropped 0.4 percent after previously increased by 0.2 percent in September. Manufacturing, which makes up 75 percent of total production, fell by 0.9 percent but there are others factor that affect this such as slower growth in Asia and Europe’s recession. There are soft domestic demand and weakening export demand.

Sandy was disrupting the railroads that make suppliers difficult to supply some company. However, many of suppliers are now operating by changing their normal transport route. This would minimize the impact on suppliers’ operation. One of shipping company for consumer and capital goods, Old Dominion Freight Line Inc., a Thomasville, North Carolina-based, claim that Sandy has prevented it from meeting projection for a 5.5 percent and 6 percent increase in tonnage shipping in October from 2011
The October tonnage was up only 4 percent but the reduction was primarily due to several days of lost revenue at the very end of October due to Sandy. Sandy cut total industrial production by almost 1 percentage point last month. The report in September previously showed 0.4 percent increase. The largest storm-related effect included production cutbacks in utilities, chemical and electronics. Mining. Including oil drilling increased by 1.5 percent and this is the biggest gain since October 2011.

Motor vehicle and parts output decreased 0.1 percent after a 1.8 percent drop a month earlier. Auto manufacturing has been a bright spot in the economy, with cars and light trucks selling at a 14.22 million at annual rate in October after climbing to 14.88 million in September, the strongest since March 2008. Output of business equipment fell 1.2 percent, the biggest drop since May 2009. Consumer goods production declined 0.9 percent, led by non-durables such as food, paper and clothing. Capacity utilization, which measures the extent to which plants are achieving their full potential output, decreased to 77.8 percent from 78.2 percent.

In conclusion, Sandy has affected most of industrial sector in the US in October and this is expected to continue until November. US may have to increases investment in those sector that are damaged or at loss until they become stable again. The government act in evacuating people before the storm come also contributes on these figures above because the decreases in industrial sector could be worse than this.

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