US factory production eked out a small increase in August as a drop in motor vehicle assemblies masked a larger rebound in output of other consumer goods and business equipment.
(Bloomberg) — US factory production eked out a small increase in August as a drop in motor vehicle assemblies masked a larger rebound in output of other consumer goods and business equipment.
The 0.1% rise in factory output last month followed a revised 0.4% gain in July, according to Federal Reserve data published Friday. Excluding auto production, manufacturing output jumped 0.6%, the largest gain since the start of the year.
Total industrial production, which also includes mining and utilities, rose 0.4%. The median forecast in a Bloomberg survey of economists called for 0.1% increases in both factory output and total industrial production.
The rebound represents welcome news for manufacturers that have struggled much of the year as retailers have limited orders to get inventories more in line with sales. Higher borrowing costs and uncertainty about the demand outlook have also contributed to a slowdown in capital goods orders.
Recent data show retailers have been making progress getting inventories more in line with demand. The inventory-to-sales ratio for retailers excluding motor vehicle dealers fell in July to the lowest level since November.
And while surveys of purchasing managers suggest the contraction of activity in the sector may still be ongoing, the pace of decline has at least begun to moderate. Separate data Friday showed manufacturing in New York unexpectedly expanded in September and forward-looking measures indicated greater optimism about business conditions in the next six months.
Read More: New York Manufacturing Expands Unexpectedly on New Orders
The Fed report showed motor vehicle assemblies fell to 10.7 million units on an annualized basis last month, the lowest level since March. Output of business equipment rose a solid 0.8% after a 0.9% advance in July, while production picked up for certain consumer goods like home electronics and appliances and furniture.
Utilities output increased 0.9%, while mining production jumped 1.4% — the largest advance since January, primarily due to higher oil and gas extraction. Capacity utilization at factories was unchanged at 77.9%, though overall utilization rose to a four-month high of 79.7%.
Meanwhile, output of defense-related goods continued to soar as factories cranked into high gear to support the war effort in Ukraine. Industrial production of defense and space equipment increased another 3.5% in August, the largest gain since May 2020, to a fresh record.
–With assistance from Kristy Scheuble.
(Updates with details on motor vehicle assemblies in seventh paragraph.)
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