U.S. Factory Production Declines in July

WASHINGTON (Reuters) – Production at U.S. factories decreased in July due to reduced motor vehicle output and disruptions caused by Hurricane Beryl.

Factory output fell by 0.3% last month, according to the Federal Reserve. Revised data showed June’s production unchanged instead of an earlier reported rise of 0.4%. Economists had anticipated a 0.2% decrease in output.

On a year-on-year basis, factory production edged up 0.1% in July. The manufacturing sector, which constitutes 10.3% of the economy, faces constraints from elevated borrowing costs.

Motor vehicle and parts production plunged 7.8% last month following a 0.3% increase in June. The Federal Reserve indicated that auto production detracted 0.6% from manufacturing output, while Hurricane Beryl contributed another 0.3% hit.

Durable goods manufacturing dropped 0.9%, as losses in motor vehicles overshadowed gains in computer, electronic products, machinery, and primary metals. Meanwhile, nondurable goods manufacturing output rose 0.4%, supported by increases in petroleum, coal products, and paper.

Mining output remained unchanged after a 0.1% decline in June, with early shutdowns in the petrochemical industries due to Hurricane Beryl affecting production.

Utilities production decreased by 3.7%, following a 2.6% rise in the previous month. Overall industrial production fell 0.6% in July after a 0.3% uptick in June.

Capacity utilization in the industrial sector, reflecting how fully companies are using resources, dropped to 77.8% from 78.4% in June, which is 1.9 percentage points below the average from 1972–2023. The manufacturing sector’s operating rate slipped to 77.2% from 77.5% in the previous month, remaining 1.1 percentage points below its long-term average.