Industrial Production Takes a Step Back in August

Industrial production fell 0.1% in August while manufacturing output decreased 0.4%, the Federal Reserve reported today. The declines for the two indices were the first since January.

The decline was primarily due to a 7.6% drop in motor vehicle and parts production in August. Excluding that, manufacturing output rose 0.1% for the month.

The central bank also revised down production figures for July, with overall industrial output down 0.2% and manufacturing lowered by 0.1%.

At 104.1% of its 2007 average, total industrial production in August was 4.1% above its August 2013 level. Manufacturing, at 100.2%, was 3.6% higher than the year-ago period.

US factory output edged back in August, primarily due to a drop in motor vehicle production. (Chart: Federal Reserve)

Capacity utilization for total industry fell in August to 78.8% from a revised 79.1% in July. Manufacturing utilization also fell, from 77.6% in July to 77.2% in August. However, compared to August 2013, overall utilization was up 1.0% and manufacturing utilization increased 1.1%. Manufacturing remained below its long-term capacity utilization of 78.7%.

The production of consumer goods decreased 0.8% in August after having risen a similar amount in July, the bank reported. The output of durable consumer goods declined 4.4% in August largely due to a drop of 7.0% in the production of automotive products. Appliances, furniture and carpeting, and miscellaneous goods also fell. However, the output of home electronics increased 2.4%.

Following four months of declines, the index for nondurable consumer goods gained 0.3%. The production of non-energy nondurables increased 0.5%, with gains in foods and tobacco and in chemical products. The output of consumer energy products fell 0.2%, wiping out the increase in July.

In August, business equipment production was flat. Increases in information processing and for industrial and other equipment offset a decrease in production of transit equipment.

The production of defense and space equipment declined 0.7% in August for its first decrease since January. Still, the index was 0.8% above its level of a year earlier.

The production of construction supplies edged up 0.1% in August following an increase of 1.3% in July, the Federal Reserve reported. Despite some recovery in the construction market, the output of construction supplies in August was still approximately 15% below its pre-recession peak.

Mining output in August rose 0.5% while the output of utilities increased 1.0%.

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