Industrial Production Increased 0.6% in August

U.S. industrial production rose in August, a welcome sign of resilience in the economy after a spate of weak readings early this year.

Industrial production, a measure of factory, mining and utility output, rose a seasonally adjusted 0.6% in August from the prior month, the Federal Reserve said Tuesday.

Economists surveyed by The Wall Street Journal had expected a 0.2% increase last month. July industrial production was revised to a decline of 0.1% from an earlier reading of a 0.2% drop.

From a year earlier, industrial production rose 0.4% in August.

Output at U.S. factories rose 0.5% last month from July. The manufacturing industry’s output accounts for about 75% of the nation’s total industrial output. Factory output has increased 0.2% per month over the past four months, after declining 0.5% per month during the first four months of the year, the Fed said.

Capacity utilization, which reflects how much industries are producing compared with what they could potentially produce, rose by 0.4 percentage point to 77.9% in August. Economists had expected 77.6%.

Tuesday’s report showed the mining index, which includes oil and natural gas extraction, increased 1.4% in August, after declining 1.5% in July as Hurricane Barry hit oil rigs in the Gulf of Mexico.

Output in the volatile mining sector was up 5.1% from a year earlier. Utility production increased 0.6% from July.

The positive report on U.S. industry comes in the wake of data pointing to contracting factory activity in the U.K., Germany, Japan and South Korea.

The factory sector faces headwinds from weak global growth and a strong dollar that makes American exports more expensive, as well as rising trade tensions between Washington and Beijing.

New York manufacturers reported the pace of activity slowed in September from the previous month as optimism about business conditions over the next six months waned.

The Empire State Manufacturing Survey’s general business conditions index, compiled by the Federal Reserve Bank of New York, was 2.0 in September, down from 4.8 in August and 4.3 in July. A positive index reading means activity is expanding.

Though manufacturing accounts for a small share of gross domestic product, the sector is highly sensitive to shifts in global demand, making it a bellwether for the broader U.S. Economy.
Source: Dow Jones