US industrial output remains sluggish, while motor vehicles distort headline

US total industrial production fell 0.4% m/m in August. Manufacturing output fell sharply by 0.5% as the seasonal boost to July motor vehicle output was unwound. Motor vehicle and parts production fell 6.4% m/m in August 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 at 0.6% m/m and mining at -0.6% m/m. 

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. On net, 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 the Q3 GDP tracking estimate unchanged at 2.4%", says Barclays.