Industrial Output Up a Weak 0.1% in August

U.S. industrial production edged up 0.1% in August as strength in the defense and aerospace industries offset widespread weakness elsewhere, the government reported Tuesday.

The Federal Reserve Board said the August increase followed a gain of 0.3% in July. The July performance had originally been reported as a 0.1% decline, but analysts said revised data showed slightly stronger activity since May than had originally been reported.

The revisions left May with a 0.4% decline and showed activity holding steady in June rather than the 0.3% drop originally reported for that month.

Sluggish Performance

Still, analysts said the industrial production figures painted a picture of a sluggish U.S. manufacturing sector.

The 0.1% August rise left the industrial production index at 124.8% of its 1977 base of 100. Much of the strength came from a 1.4% rise in production at defense and aerospace plants, putting this category 5.1% higher than a year ago.

In the past year, however, overall industrial output has risen a tiny 0.3%, and it has actually fallen 1.1% since January.

“The economy has been basically flat for the last two years, and we think it is going to stay flat for another year,” said David Wyss, economist with Data Resources Inc. Wyss said production was held back in August by the effects of the steel strike and efforts by auto makers to slash production in order to reduce huge backlogs of unsold cars.

Output of consumer goods rose 0.2% in August even though autos were assembled at an annual rate of 7 million units, down 8% from July, when production was at a rate of 7.6 million units.

Production of goods for the home such as appliances and furniture rose 0.4%, while production of business equipment climbed 0.3%.

Manufacturing plants increased production 0.3% in August, with all of the gain coming from increased output of non-durable goods.