Auto Manufacturing Slowdown Pushes US Industrial Production Down Ford

Auto Manufacturing Slowdown Pushes US Industrial Production Down

“The main reason for the poor manufacturing performance was an inventory correction to motor vehicles and parts’ exceptionally strong growth of 10.6% in July. In August, motor vehicles and parts production declined 6.4%; huge production swings in the auto industry are not atypical," said MAPI.

WASHINGTON – Due to a large drop in automobile manufacturing that partly reversed its solid gain in July, U.S. industrial production fell in August, the Federal Reserve reported Tuesday.

Total industrial output fell 0.4% in August after an upwardly revised 0.9% rise in July, the central bank said.

The mining sector reverted to its downtrend from the first half of the year as oil prices fell, falling 0.6%.

Utilities was the only group showing higher output, a 0.6% gain.

Manufacturing, which accounts for about 75% of industrial production, dropped 0.5%, mainly because of the slowdown in production of motor vehicles and parts.

“Manufacturing growth and decline was evenly spread in August, with production down in 10 of the 20 major manufacturing industries,”explaind  Daniel J. Meckstroth, chief economist for the MAPI Foundation, the research affiliate of the Manufacturers Alliance for Productivity and Innovation.

“The main reason for the poor manufacturing performance was an inventory correction to motor vehicles and parts’ exceptionally strong growth of 10.6% in July. In August, motor vehicles and parts production declined 6.4%; huge production swings in the auto industry are not atypical.

“Manufacturing production also saw large declines in fabricated metal products and aerospace production last month,” Meckstroth said. “There were exceptionally strong gains in nonmetallic minerals products, driven by strong construction activity and a welcome and strong rebound in machinery production.

“Durable goods, which make up 52% of manufacturing, were responsible for all of the decline in manufacturing activity last month, while nondurable goods manufacturing production was unchanged.

“Manufacturing production fell in three of the last six months but production grew at a 1.3% annual rate in the three months ending in August versus the previous three months and is up 1.4% from the same period one year ago,” Meckstroth said.  

“There is no mistaking the sluggish growth in industrial activity,” he concluded. “The headwinds in manufacturing are rising trade deficits, a declining oil country goods supply chain, and high inventories. We have scaled back our forecast for manufacturing production growth this year. We foresee only 2.1% growth in 2015 manufacturing industrial production. With a return to normal winter weather, we predict 3.4% growth in 2016.”

Copyright Agence France-Presse, 2015

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