U.S. Industrial Production Down 1.1%

Motor vehicle and parts production were down 11.9%.

Industrial production decreased 1.1% in August and was revised down in June and July to show smaller gains of 0.2% and 0.1%, the Federal Reserve reported on Sept. 15.

After little movement over the previous three months, factory output was down 1% in August, in part because of a drop of 11.9% in the production of motor vehicles and parts. Excluding motor vehicles and parts, the index for manufacturing decreased 0.3%.

"All of the decline in industrial activity, however, cannot be blamed on the auto industry. Excluding motor vehicles and parts, manufacturing production activity still fell 0.3%. Fallout from the housing collapse has reduced production activity in household appliances, furniture and quarrying. And there are ripple effects flowing throughout the intermediate materials industries. While strong export activity can cushion the decline in industrial activity, when consumers cut spending for goods and housing, manufacturing suffers," said Daniel J. Meckstroth, Chief Economist, Manufacturers Alliance/MAPI.

Looking specifically at manufacturing output fell 1% in August, and the factory operating rate moved down to 76.6%, a level about 3 percentage points below both its 1972-2007 average and its level of 12 months earlier.

The production of durable goods industries decreased 1.6%. Declines occurred in the output of nonmetallic mineral products; electrical equipment, appliances, and components; aerospace and miscellaneous transportation equipment; and furniture and related products. However, the output of primary metals rose 0.4% after a sharp drop in the second quarter, and the indexes for wood products, machinery, and miscellaneous goods posted gains in August of between 0.3% and 0.9%.

The production indexes for computer and electronic products and fabricated metal products were about unchanged. The production of nondurable goods fell 0.5%. Declines in the indexes for apparel and leather products, paper, petroleum and coal products, chemicals, and plastics and rubber products more than offset increases in the indexes for food, beverage, and tobacco products and for printing.

Precautionary shutdowns in the Gulf of Mexico in advance of Hurricane Gustav partly curtailed refinery activity, petrochemical production, and the extraction of crude oil and natural gas; however, the estimated effect in August of disruptions due to the hurricane on total industrial production is estimated to have been less than 0.1 percentage point.

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