Output at U.S. factories crumbles in July
U.S. factory output retreated in July after rising a month earlier by the most this year, signalling manufacturing is having trouble gaining momentum against a backdrop of lacklustre global demand and a trade war with China.
The 0.4-per-cent decline in manufacturing output followed an upwardly revised 0.6-per-cent advance in the prior month, Federal Reserve data showed Thursday. The median estimate in a Bloomberg survey of economists called for a 0.3-per-cent July decrease.
Total industrial production, which also includes mines and utilities, fell 0.2 per cent last month, reflecting a temporary decline in Gulf Coast oil extraction tied to hurricane Barry.
The Fed’s report, which showed a weakening in factory output for the fifth time this year, is the latest sign of fragility in the manufacturing sector as goods producers face the persistent headwinds of the U.s.-china trade war and tepid global demand.
The rising U.S. trade tensions with China and recession fears may further depress manufacturing output in the coming months.
At the same time, a pair of reports earlier Thursday from the Federal Reserve banks of New York and Philadelphia showed gauges of manufacturing expanded in August more than projected.
Another report Thursday showed American consumers continue to spend, which will help support domestic manufacturing.
U.S. retail sales surged 0.7 per cent in July, the most in four months and led by broad gains across merchant categories, the Commerce Department reported.
The decline in July factory production was broad, including decreases in machinery, fabricated metals, electronic equipment, plastics and textiles.
Capacity utilization, measuring the amount of a plant that is in use, dropped to 77.5 per cent, the lowest since October 2017, from 77.8 per cent.
Utility output increased 3.1 per cent after falling 3.3 per cent the prior month.
Mining production fell 1.8 per cent, with oil and gas well drilling slumping 3.3 per cent.