- Scott Brown, chief economist at Raymond James & Associates Inc.
Industrial production in the U.S. unexpectedly declined in August for the first time in seven months amid reversal in the auto-sector after a strong performance in the previous month. Output at factories, mines and utilities fell 0.1% after a downwardly revised 0.2% climb in the previous month. Analysts, however, expected a 0.3% increase. The key drag appeared to be manufacturing output, which fell 0.4% in August following a jump in July of 0.7% due to strong output from the autos sector. Utilities climbed 1%, while mining gained 0.5%. These two components make up roughly 25% of industrial output, while manufacturing accounts for almost 75%. Still, overall industrial output in August was up 4.1% from the same period last year.
In the meantime, the manufacturing sector in the New York area expanded in September, with the Empire State Manufacturing Index reaching 27.5 compared to market consensus of 16.00 and the previous month's gauge of 14.69. A reading above zero indicates improving conditions in the sector, while below zero shows deteriorating conditions. The new orders index surged to 16.9, while shipments reached 27.1, up by 2 points from the previous month. A separate report showed that capacity utilization rate in the world's number one economy unexpectedly declined to 78.8% down from 79.1%. The drop in capacity utilization in August is an indication of more spare resources in the factory sector. The gauge has yet to recover prerecession levels.
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