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U.S. manufacturing output ekes out small gain in August

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U.S. manufacturing output ekes out small gain in August Reuters. FILE PHOTO: Workers build electric buses at the BYD electric bus factory in Lancaster, California, U.S., July 1, 2021. REUTERS/Mike Blake

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WASHINGTON (Reuters) – Production at U.S. factories edged up in August amid a decline at automobile assembly plants, but gains in the output of machinery along with computer and electronic products pointed to underlying strength in manufacturing.

Manufacturing output gained 0.1% last month after increasing 0.6% in July, the Federal Reserve said on Thursday. Economists polled by Reuters had forecast factory production will be unchanged. Output increased 3.3% in comparison to August 2021.

Manufacturing, which makes up about 11.9% of the U.S. economy, is slowing as spending shifts back again to services from goods.

Higher interest levels because the Fed fights inflation along with cooling demand overseas and a solid dollar are headwinds for factories.

Production at auto plants dropped 1.4% last month. Auto production surged 3.2% in July, partly boosted by seasonal factors, that have been not repeated in August. Excluding automobiles, manufacturing gained 0.2%.

Output of long-lasting manufactured goods was unchanged. Gains of at the very least 1.0% were recorded by makers of machinery, computer and electronic products and also aerospace and miscellaneous transportation equipment. These were, however, offset by losses greater than 1% reported by producers of wood and furniture products.

Production of nondurable manufactured goods rose 0.2%.

Mining output was unchanged in August after posting five consecutive monthly gains. Utilities production fell 2.3%. Because of this, overall industrial production slipped 0.2% in August after increasing 0.5% in July.

Capacity utilization for the manufacturing sector, a way of measuring how fully firms are employing their resources, was unchanged at 79.6% in August. It really is 1.4 percentage points above its long-run average. Overall capacity use for the industrial sector fell 0.2 percentage indicate 80.0% last month. It really is 0.4 percentage point above its 1972-2021 average.

Officials at the Fed have a tendency to look at capacity use measures for signals of just how much “slack” remains throughout the market – what lengths growth has room to perform before it becomes inflationary.

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