Industrial Production Surges Higher On Strong Manufacturing and Mining Output

U.S. industrial production increased by much more than expected in August, providing an unexpected source of strength for the U.S. economy alongside consumer spending even as the labor market has softened.

Industrial production—a broad measure of factory, mining, and utility output—rose a seasonally adjusted 0.8 percent in August, the Federal Reserve said Tuesday. Economists had forecast a smaller 0.1 percent rise.

Production rose solidly in both the manufacturing and mining sectors, the parts of industrial production that are considered economically sensitive. Manufacturing output rose 0.9 percent and mining—which includes oil and natural gas extraction—increased 0.8 percent after declining in the two previous months.

Production of consumer goods rose 0.7 percent, boosted by a 10.5 percent increase in auto production.  Production of business equipment jumped 1.4 percent, also boosted by transit goods. Production of construction goods climed 1.4 percent.

Defense and space equipment posted a gain of 0.5 percent and was 3.2 percent above its year-earlier level.

Business supplies was the only weak spot among major market groups, slipping 0.2 percent in August after decreasing 0.7 percent in July.

Capacity utilization for manufacturing increased 0.6 percentage point to 77.2 percent in August, a rate that is 1.1 percentage points below its long-term average. Total capacity utilization rose to 78 percent and the prior month’s figure was revised up to 77.8 percent from 77.4 percent.