By Ian McKendry
WASHINGTON (MNI) – Industrial production fell more than expected in
August, falling by 1.2% largely on weakness in manufacturing, mining and
utilities. However, the Federal Reserve said that Hurricane Isaac likely
decreased production by an estimated 0.3 percentage point in the month.
“Hurricane Isaac restrained output in the Gulf Coast region at the
end of August,” the Fed said, adding “precautionary shutdowns of oil and
gas rigs in the Gulf of Mexico in advance of the hurricane contributed
to a drop of 1.8 percent in the output of mines for August.”
While Isaac weighed on lifting, the record heat wave that hit the
contiguous U.S. in July moderated in August and already reported
manufacturing surveys from the Institute of Supply Management hinted
that manufacturing was weaker in August.
July industrial production was also revised down to +0.5% from the
previously reported +0.6% and capacity utilization fell from 79.2% in
July to 78.2%.
Even allowing for the impact of Isaac the report was still very
weak and the decline in industrial production was the largest since
March 2009 when it fell 1.7%. Extracting Isaac’s depresing effect, IP
still fell 0.9% which would have be the largest decline since May 2009.
“The declines were more widespread than generally expected with
drops in autos, machinery, computers and utilities,” John Silvia, chief
economist at Wells Fargo said in a note.
“A return to sustained robust growth is problematic given the many
headwinds the economy faces,” Steven Wood, chief economist at Insight
Economics said in an email, adding “With the inventory cycle complete,
industrial activity will only strengthen if there is a strengthening in
final demands, particularly consumer durable goods spending.
** MNI Washington Bureau: 202-371-2121 **
[TOPICS: M$U$$$,MAUDS$]
