Industrial production in the U.S. was unchanged in July as a slowdown at factories overshadowed an increase in mining.
The reading for output at factories, mines and utilities followed a 0.2% gain the prior month that was smaller than previously reported, a report from the Federal Reserve showed today in Washington. The median forecast in a Bloomberg survey of 82 economists called for a 0.3% rise in July. Manufacturing, which makes up 75% of total production, declined for the first time in three months.
Production may rebound as low interest rates spur sales of new cars and homes, benefiting companies from General Motors Co. to United Technologies Corp. The Fed report contrasts with data from the Institute for Supply Management indicating manufacturing grew in July at the fastest rate in more than two years.
“It’s a weak start to the quarter for industrial production, but I wouldn’t worry about one data point,” Jennifer Lee, a senior economist at BMO Capital Markets in Toronto, said before the report. “Other reports show manufacturing had a pretty solid month. Demand is starting to pick up. We’re setting up for a stronger second half for the economy.”
Manufacturing in the New York region expanded less than forecast in August, separate data from the Federal Reserve Bank of New York showed. The bank’s general economic index fell to 8.2 from 9.5 last month. Readings greater than zero signal expansion in New York, northern New Jersey and southern Connecticut. The median projection in a Bloomberg survey of 50 economists called for a reading of 10.
Other reports today showed initial claims for unemployment benefits fell last week to the lowest level since October 2007, and the cost of living rose in July for a third month, supporting the Fed’s forecast that inflation will move closer to its target.
Estimates for industrial production in the Bloomberg survey ranged from a drop of 0.3% to an increase of 0.9%. The prior month was previously reported as a gain of 0.3%.
Manufacturing, which accounts for about 12% of the economy, declined 0.1% after rising 0.2%.
Today’s Fed report also showed that capacity utilization, which measures the amount of plants that are in use, fell to 77.6% from 77.7% the prior month.
Utility output fell 2.1%, the fourth straight drop. Mining production, which includes oil drilling, increased 2.1%.