U.S. industrial production unlikely to recover in months ahead

U.S. industrial production data for the month of August is set to release later today. The effects of decelerating global growth and the ongoing trade war are clearly evident in the manufacturing sector. Total industrial production had dropped 0.2 percent in the prior month, mainly driven by a 0.4 percent fall in manufacturing output.

Given that trade discussions have increased further and the August ISM manufacturing index dropped into contraction territory for the first time since 2016, conditions in the factory sector are unlikely to rebound considerably in the months ahead, noted Wells Fargo in a research report. Industrial production is expected to have dropped 0.1 percent in August.

Mining production had dropped 1.8 percent in the prior month. Lower commodity prices have been a major drag on the sector are likely to continue to weigh on the production. Oil and gas production has been especially hard hit lately.

“A steadily declining rig count in 2019 reflects the pullback in capital spending throughout the sector brought on by last year’s sharp decline in oil prices”, added Wells Fargo.