Economy31 minutes ago (September 15, 2022 10AM ET)
© Reuters. FILE PHOTO: Workers build electric buses at the BYD electric bus factory in Lancaster, California, U.S., July 1, 2021. REUTERS/Mike Black
WASHINGTON (Reuters) – U.S. factory output edged up in August as auto assembly plants slumped, but machinery output rose
Manufacturing output rose 0.1% last month after rising 0.6% in July, the Federal Reserve said on Thursday. Economists polled by Reuters had forecast factory production to remain unchanged. Output increased by 3.3% compared to August 2021.
Manufacturing, which accounts for 11.9% of the U.S. economy, is slowing as spending shifts from goods to services.
Fed’s fight against inflation, cooling overseas demand and rising interest rates due to a stronger dollar are bad for factories.
Production at auto plants fell 1.4% last month. Auto production surged 3.2% in July, driven in part by seasonal factors, and did not repeat in August. Excluding autos, manufacturing rose 0.2%.
The output of long-life finished products remains unchanged. Makers of machinery, computers and electronics, and aerospace and miscellaneous transportation equipment posted gains of at least 1.0%. However, they were offset by losses of more than 1% reported by producers of wood and furniture products.
Production of non-durable manufactured goods increased by 0.2%.
Mining output remained unchanged in August after rising for five straight months. Utilities production fell 2.3%. As a result, overall industrial production fell 0.2% in August, following a 0.5% rise in July.
Manufacturing’s capacity utilization rate, a measure of how well companies are making the most of their resources, was unchanged at 79.6% in August. It was 1.4 percentage points above the long-term average. The overall capacity utilisation rate in the industrial sector fell by 0.2 percentage points to 80.0% last month. It is 0.4 percentage points higher than the 1972-2021 average.
Fed officials tend to focus on capacity usage indicators for a signal of how much “slack” is still in the economy – how there is plenty of room for growth before it becomes inflation.