Industrial Production Fell 0.4% in August

U.S industrial production declined more than expected in August, a sign that demand for manufactured goods remains weak. Output fell 0.4% last month compared to a 0.6% increase in July. The decline was the largest since March.

The industrial production gauge measures output from manufacturing, mining, and utilities sectors. It declined for the majority of the past 18 months due to weak global demand, low oil prices, and a stronger dollar. Despite a recent rebound in oil prices, and stability in the dollar, the factory sector continues to struggle.

Manufacturing output, which accounts for the majority of industrial production, fell 0.4%. Utilities dropped 1.4%, while Mining gained 1% amid stabilizing commodity prices. Year to date however, mining output is down 9.3%.

Capacity utilization, which measures the proportion of a plant that is in use, dropped to 75.5% from 75.9%.

Earlier this month the Institute for Supply Management’s index of manufacturing activity fell to 49.4 from 52.6 in July. A reading above 50 indicates factory activity is growing, while a reading below 50 signals activity is contracting. Fed officials will take industrial production figures into account when they meet next week to discuss the timing of the next rate hike.

Uzair Khalil


Wall Street Journal 

This entry was posted in Fed, macro-economic, Macro/Sector News, Manufacturing. Bookmark the permalink.

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