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US manufacturing output drops in July

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US manufacturing output dropped in July, ending a run of two months of growth.

[WASHINGTON] US manufacturing output dropped in July, ending a run of two months of growth.

The Federal Reserve on Thursday said manufacturing production shrank 0.4 per cent last month, a steeper drop than the 0.1 per cent decline expected by analysts in a Reuters poll.

Overall industrial output was down 0.2 per cent in July, after analysts had anticipated a 0.1 per cent gain.

The data may add to concerns about the strength of the US factory sector amid lingering concerns about a slowing global economy. The July decline was the largest since April.

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Manufacturing output is down over 1.5 per cent since December 2018, the Fed said.

In July, the decline in factory output was broadbased across a number of sectors, including wood products, machinery and nonmetallic mineral products, according to the Fed.

Mining output fell 1.8 per cent in July, which the Fed attributed to a sharp but temporary decline in oil extraction in the Gulf of Mexico due to Hurricane Barry. Despite the decline, mining output is still up 5.5 per cent over the last year.

Output for utilities was up 3.1 per cent after falling a similar amount in June.

Capacity utilisation for manufacturing, a measure of how fully firms are using their resources, dipped slightly to 75.4 per cent in July.

Capacity utilisation across all industries, including utilities and mining, was down slightly to 77.5 per cent, and now stands 2.3 percentage points below its 1972-2018 average.

Officials at the Fed tend to look at capacity use measures as an indication of how much more the economy may be able to grow before inflation becomes a concern.

REUTERS