Disappointing Industrial Production

Industrial production fell a much greater than expected 1.1%. A major factor was a drop of 11.9% in auto output. Excluding this factor, output was down 0.3%.

Also contributing to the weak overall number was a 3.2% drop in utility output. This was probably in part related to cooler than normal weather, which kept air conditioning use down compared to seasonal trends. Mining output was also down 0.4% after a 1.1% July increase.

Thus, several factors aligned to create a very weak number. This weakness can not be ignored, but is not likely to continue next month. In September, however, mining output will be depressed due to the impact of hurricanes in the Gulf.