US industrial production rebounded in August, bouncing back from a decline in July caused by Hurricane Beryl, Bloomberg reports.
The Federal Reserve reported a 0.8% increase in output at factories, mines, and utilities, surpassing all estimates from economists. This follows a downwardly revised 0.9% drop in production the previous month.
The August surge was driven by a 0.9% increase in manufacturing production and a rise in mining and energy extraction. Notably, motor vehicle output played a significant role in the manufacturing boost. Excluding autos, factory production still saw a 0.3% increase after two consecutive months of decline.
While the rebound is encouraging, manufacturing activity remains sluggish overall. High borrowing costs continue to stifle capital spending and consumer demand for large purchases. Export demand also remains subdued. However, with inflation showing signs of easing, the Federal Reserve is expected to take its first step towards easing monetary policy on Wednesday.
The Fed’s data also revealed increases in production of consumer goods, business equipment, and construction supplies. Capacity utilization at factories, a measure of production potential, rose to 77.2% from 76.6%. The overall industrial utilization rate increased to 78%.
Hurricane Beryl significantly disrupted production in July, leading to power outages and temporary closures at factories in Texas, particularly affecting natural gas extraction.
