After reporting sharp increases in U.S. industrial production over the three previous months, the Federal Reserve released a report on Tuesday showing production rose by much less than expected in the month of August.
The Fed said industrial production climbed by 0.4 percent in August after soaring by an upwardly revised 3.5 percent in July.
Economists had expected production to jump by 1.0 percent compared to the 3.0 percent spike originally reported for the previous month.
Production increased for the fourth consecutive month but remains 7.3 percent below its pre-pandemic February level.
“We are vigilant that future progress toward a full recovery in the industrial sector will be slow and uneven as a health solution remains out of reach and fiscal relief fades,” said Oren Klachkin, Lead U.S. Economist at Oxford Economics.
“While the travails are comparatively less severe than in certain services sectors, industrial production risks remain heavily tilted to the downside,” he added.
Manufacturing output continued to improve in August, surging up by 1.0 percent, although the Fed noted the gains for most manufacturing industries have gradually slowed since June.
The increase in manufacturing output was partly offset by a sharp pullback in mining output, which plunged by 2.5 percent in August after jumping by 1.4 percent in July.
The steep decline in mining output came as Tropical Storm Marco and Hurricane Laura caused sharp but temporary drops in oil and gas extraction and well drilling.
The report said utilities output also dipped by 0.4 percent in August after spiking by 3.8 percent in the previous month.
Meanwhile, the Fed said industrial capacity utilization crept up to 71.4 percent in August from an upwardly revised 71.1 percent in July.
Economists had expected capacity utilization to climb to 71.4 percent from the 70.6 percent originally reported for the previous month.
Capacity utilization in the manufacturing sector rose to 70.2 percent, while capacity utilization in both the mining and utilities sectors dropped to 74.5 percent.
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