U.S. Factory Production Surges in August

WASHINGTON (Reuters) – Production at U.S. factories surged in August, driven by a rebound in motor vehicle output. However, data for the previous month was revised lower, indicating that manufacturing remains flat.

Factory output increased by 0.9% in August, following a downward revision of 0.7% drop in July, according to the Federal Reserve. Analysts polled by Reuters predicted a 0.3% rise in factory output after initially reporting a 0.3% decline in July.

In year-on-year terms, factory production rose by 0.2% in August. Manufacturing, which represents 10.3% of the economy, continues to struggle due to high borrowing costs, but relief may be imminent as the U.S. central bank is expected to begin easing policies soon.

Motor vehicle and parts production accelerated by 9.8% last month, following an 8.9% decline in July, while durable manufacturing production increased by 2.1% after a 1.5% decrease in July.

Besides motor vehicles, other sectors like primary metals, electrical equipment, appliances, components, aerospace, and miscellaneous transportation equipment saw gains. However, production of miscellaneous durable manufacturing goods dropped by 0.9%.

Nondurable manufacturing output fell by 0.2%, affected negatively by reductions in printing, support, petroleum, and coal products, which overshadowed gains in chemicals and paper production.

Mining output rebounded by 0.8% in August after a 0.4% dip in July, influenced by early shutdowns in petrochemical and related sectors due to Hurricane Beryl. Oil and gas drilling rose by 0.3%, reversing the previous month’s 0.3% decline.

Utilities production remained unchanged, following a significant 3.0% drop the previous month. Overall, industrial production rebounded by 0.8% in August after a 0.9% decline in July.

Capacity utilization in the industrial sector, reflecting how fully firms use their resources, increased to 78.0% from 77.4% in July. However, it is still 1.7 percentage points below the average from 1972–2023. The manufacturing sector's operating rate rose to 77.2% from 76.6% in the previous month, which is 1.1 percentage points below its long-term average.