US industrial output falls more than expected as utilities sag

[WASHINGTON] US industrial production fell more than expected in August, hurt in part by a sharp decline in utilities output, the Federal Reserve said on Thursday.

Industrial output fell 0.4 per cent last month after a downwardly revised 0.6 per cent increase in July. Last month, manufacturing output also declined 0.4 per cent.

Economists polled by Reuters had forecast industrial production declining 0.3 per cent last month.

The industrial sector measured by the US central bank comprises manufacturing, mining, and electric and gas utilities.

It had recently picked up after declining for much of the last 18 months but continues to struggle to shake off the dampening effects of weak global demand, a strong dollar and low oil prices.

Last month, there were some positive signs for the hard-hit energy sector, with mining output rising 1.0 per cent, it's fourth consecutive monthly increase. However, the index for utilities fell 1.4 per cent.

Business equipment output also dropped 0.4 per cent, with cutbacks of nearly 2 per cent for industrial and other equipment, the Fed said.

With overall output decreasing, the per centage of industrial capacity in use fell 0.4 per centage points in August to 75.5 per cent, from an unrevised 75.9 per cent in July.

The Fed sees capacity use as a leading indicator in deciding how much further the economy can grow before sparking higher inflation.

REUTERS