US MANUFACTURING DIPS FOR FIRST TIME SINCE JANUARY

18-09-2014

US manufacturing output declined in August for the first time in seven months, reflecting a sharp fall in production at auto plants.

Output at manufacturing plants fell 0.4 percent in August after a 0.7 percent rise in July, according to the Federal Reserve.

Total industrial production was down 0.1 percent in August, also the first setback for the overall figure since January.

Output was up in mining and utility production but these gains were not enough to offset the decline in manufacturing.

Output of motor vehicles and parts dropped 7.6 percent after a 9.3 percent increase in July.

But economists say the reversal is not a great concern.

The July figure was boosted because many plants did not shut down as they normally do to retool for new models. That made August look weaker.

Economists had been looking for a weaker figure for factory output in August as auto activity returned to more normal levels. The fact that there were fewer plant shutdowns in July made output look stronger after the government adjusted the figure for normal seasonal variations. And that seasonal adjustment then made the August figures look weaker.

A separate report from the Institute for Supply Management showed that US manufacturing rose on the ISM index to the highest level in more than three years. The ISM manufacturing gauge increased to 59, the highest point since March 2011. The index in July stood at 57.1. Any reading above 50 signals that manufacturing is growing.

Factories are benefiting from strong demand for aircraft, furniture and steel.

But US manufacturers face challenges in some of their major export markets. The European economy is performing sluggishly while slower growth in China has weighed on business activity in that country.

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