U.S. industrial output slows to a 0.4% gain

U.S. industrial production slowed to a 0.4% gain in August as shutdowns of petroleum refineries and petrochemical plants caused by Hurricane Ida curbed manufacturing activity.

Plant closures long the Gulf Coast as well as lost oil production during last month’s hurricane shaved 0.3 percentage points from output, the Federal Reserve reported Wednesday. Industrial output had risen a revised 0.8% in July.

Industrial production covers manufacturing, utilities and mining. For just manufacturing, factory output slowed to a tiny 0.2% gain, reflecting the hurricane’s effects and continuing supply chain problems. Factory output had risen a much stronger 1.6% in July.

Manufacturing has been hobbled this year due to snarled supply chains, particularly at auto plants where semiconductors needed for new cars have been in short supply.

Economists said problems, including labor shortages due to the resurgence of COVID-19 cases at home and abroad continue to depress manufacturing activity.

Andrew Hunter, senior U.S. economist at Capital Economics, said rising infection rates in Asia appeared to be a key reason Ford and General Motors were forced to announce expanded plant shutdowns in September amid a worsening semiconductor shortage.

“The industrial recovery is losing steam and with the delta variant causing disruption to global supply chains and Hurricane Ida weighing on oil production, a further slowdown looks likely in September,” Hunter said.