Total industrial production fell 0.4% m/m in August, coming in weaker than forecast (0.1%) and consensus expectations (-0.2%). Manufacturing output fell sharply by 0.5% (forecast: -0.4%) as the seasonal boost to July motor vehicle output was unwound. Motor vehicle and parts production fell 6.4% m/m in August (previous: +10.6%) after a shorter-than-usual retooling shutdown in July boosted last month's seasonally adjusted numbers. Excluding motor vehicles and parts production, manufacturing was flat in August after just 0.1% m/m growth in July.
This measure of core manufacturing suggests that the industrial sector in the US remains sluggish. Elsewhere, utilities output (0.6% m/m, previous: -0.2%) and mining (-0.6% m/m, previous: 1.8%) came in below expectations, as gains were expected in these two categories to offset the drag from manufacturing output in August. Natural gas utilities did report 1.2% growth in output, but electric utilities rose less than expected at 0.5% m/m. Within the mining sector, oil and gas well drilling expanded 1.5% m/m, but this was offset by softness elsewhere.
"Manufacturing and industrial output in the US remains lackluster and we do not expect a sharp turnaround for the sector. That said, the consumer sector remains strong and continues to propel overall GDP growth of about 2.5%.The details of this morning's IP report were broadly in line with expectations and leave our Q3 GDP tracking estimate unchanged at 2.4%",says Barclays.
