U.S. Industrial Production Unexpectedly Edges Lower As Utilities Output Slumps
The Federal Reserve released a report on Thursday unexpectedly showing a modest decrease in U.S. industrial production in the month of August.
The report said industrial production edged down by 0.2 percent in August after climbing by a downwardly revised 0.5 percent in July.
Economists had expected industrial production to inch up by 0.2 percent compared to the 0.6 percent increase originally reported for the previous month.
The unexpected dip in industrial production largely reflected a continued weather-related slump in utilities output, which plunged by 2.3 percent in August after tumbling by 1.2 percent in July.
However, Paul Ashworth, Chief North America Economist at Capital Economics, said utilities output is expected to rebound in September due to the spike in West Coast temperatures.
The report also showed mining output was unchanged in August after jumping by 1.0 percent in July, while manufacturing output crept up by 0.1 percent in August after rising by 0.6 percent in July.
“Manufacturing output edged up by 0.1% m/m in August, as notable gains in petroleum & coal, machinery and electronics were partly offset by a drop back in motor vehicles and parts,” said Ashworth.
He added, “With global manufacturing slumping due to the double whammy of zero-covid lockdowns in China and rocketing energy prices in Europe, we expect any further gains in U.S. manufacturing output over the coming months to be similarly muted.”
The report also showed capacity utilization in the industrial sector dipped to 80.0 percent in August from a revised 80.2 percent in July.
Economists had expected capacity utilization to come in changed compared to the 80.3 percent originally reported for the previous month.
Capacity utilization in the utilities sector fell 72.8 percent, while capacity utilization in the mining sector edged down to 88.1 percent and capacity utilization in the manufacturing sector was unchanged at 79.6 percent.
“Overall, this report is consistent with our view that US economic growth will be weak, but still few signs of a recession in the hard activity data,” said Ashworth.
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