U.S. industrial production falls sequentially in August

Industrial production in the U.S. came in weaker than anticipated in the month of August. Industrial production dropped 0.9 percent sequentially in the month, the first drop in seven months. The U.S. Fed estimates that 0.75 percentage points of the drop was due to Hurricane Harvey. The Fed added that the manufacturing industries with the biggest estimated storm-related effects were petroleum refining, organic chemicals, and plastics materials and resins. The subdued August data leave the sector looking vulnerable before the further possible negative disruption in September, noted Barclays in a research report.

Even if the storm weighed in on production considerably, the U.S. Fed estimates imply that industrial production might have dropped modestly even without the hurricane. The report’s details show that the declines were widespread throughout industry and market groups. Manufacturing, utilities and mining all dropped in the month by 0.3 percent, 5.5 percent and 0.8 percent.

Within manufacturing, the decline was mainly driven by non-durables, which dropped 0.9 percent, while production of durable goods rose 0.3 percent. the sharp decline in utilities seem to have been driven by the unseasonably warm weather in the East Coast. A similar picture of widespread weakness emerges from the market grouping breakdown: production of consumer goods, business equipment, nonindustrial supplies and materials all dropped in August. Meanwhile, July’s industrial production print was revised up slightly.

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