Manufacturing Rises From Slump
U.S. industrial output growth almost stalled last month as production cuts at mines and utilities nearly swamped a strong performance at factories, a report from the Federal Reserve showed Wednesday.
The report, which was weaker than expected but contained upward revisions to July, showed recent gains in production had finally lifted the manufacturing sector out of the slump it entered in June 2000.
“The long manufacturing recession ... is over,” said Daniel Meckstroth, chief economist for the Manufacturers Alliance/MAPI, a business research group.
Production at U.S. factories, mines and utilities rose 0.1% last month, the Fed’s report showed, well below Wall Street forecasts for a 0.5% gain.
However, economists said big drops in electricity output amid unusually cool summer weather masked underlying industrial strength, and said a bounce back was likely when a more normal seasonal pattern returned.
Manufacturing production grew 0.5% in August after an upwardly revised 0.9% July rise. The revisions showed the factory sector, which bottomed out in December 2001, had finally completed in July a slow crawl back to its previous peak.
With production up in August, factories operated at 76.8% of capacity, the highest rate since March 2001.
A step up in production at automakers, which pushed the vehicle assembly rate up to an annualized 12.03 million units from July’s 11.51 million pace, accounted for much of August’s factory strength. Excluding vehicles and parts, industrial output would have dropped 0.1%.
The other two industrial sectors, mining and utilities, both contracted in August. Mining production fell 1.1% after a 1.3% increase in July, while utility output fell 2.4%, the third straight monthly decline.
A separate report showed U.S. business inventories climbed 0.9% in July, a slightly bigger-than-expected gain that built on an upwardly revised 1.1% June increase.
The two-month performance marked the biggest buildup in stockpiles in nearly five years, the Commerce Department said.
