(Sept 18): US factory output unexpectedly declined for the first time this year as production of business equipment cooled and manufacturers grappled with higher input costs.

Production at manufacturers fell 0.3% in August, according to Federal Reserve data out Friday. The median forecast in a Bloomberg survey of economists called for a 0.3% advance.

Total industrial output, which also includes mines and utilities, stagnated. Utility production climbed 1.8%, fuelled by a pickup in electricity demand. Mining output edged up.

The cooling in August factory output represents a pause in the upswing in manufacturing this year, largely fuelled by solid capital spending and healthy consumer demand. Yet, producers are facing higher costs for oil and other materials as well as supply-chain disruptions tied to wars in the Middle East and Ukraine.

The Fed’s report showed a 0.5% drop in output of business equipment and a 1.2% decline in defense and space equipment after strength in prior months. Production of construction supplies as well as home electronics and information processing equipment also declined.

Still, output of business equipment and defence and space equipment remained notably higher from a year earlier.

Among industry groups, output of computer and electronic products, furniture and primary metals declined last month. Machinery, apparel and textiles increased.

Auto production fell 1.2% from the prior month. Excluding motor vehicles, manufacturing output dropped 0.2%.

Capacity utilisation at factories, a measure of potential output being used, fell to a five-month low of 75.7%. The overall industrial utilisation rate was unchanged.

Uploaded by Magessan Varatharaja