U.S. Industrial Production Unexpectedly Edges Down 0.1% In August

16/09/2014 07:42 AST

With manufacturing output falling for the first time since January, the Federal Reserve released a report on Monday showing that U.S. industrial production unexpectedly decreased in the month of August.

The report said industrial production edged down by 0.1 percent in August after inching up by a downwardly revised 0.2 percent in July.

The modest drop came as a surprise to economists, who had expected production to climb by 0.3 percent compared to the 0.4 percent increase originally reported for the previous month.

The unexpected drop in industrial production came as manufacturing output fell by 0.4 percent in August after rising by 0.7 percent in July.

The Fed noted that the production of motor vehicles and parts tumbled by 7.6 percent in August after jumping by more than 9 percent in July.

Meanwhile, the report also said mining output rose by 0.5 percent in August after dipping by 0.3 percent in the previous month.

Utilities output also surged up by 1.0 percent in August after plunging by 2.7 percent and 2.0 percent in July and June, respectively.

Peter Boockvar, managing director at the Lindsey Group, said, "Bottom line, I'm going to give today's miss a pass due to the volatile reads of auto production during July and August but there is no question that auto sales and production have been a bright spot for the economy."

"Thus, the industry has to be a key focus going forward in light of the significant contribution subprime lending and easy financing has given to the sector," he added.

The Fed also said capacity utilization for total industry decreased 0.3 percentage points to 78.8 percent in August from 79.1 in July. Capacity utilization in the manufacturing sector dipped to 77.2 percent in August from 77.6 percent in July, and capacity utilization in the mining sector edged down to 89.1 percent from 89.4 percent. Meanwhile, the report said capacity utilization in the utilities sector climbed to 76.4 percent in August from 75.6 in the previous month.

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