Manufacturing Activity Ticked Up in August, but Unlikely to Be Sustained

Summary Industrial production surprised to the upside in August, with a pop in mining output accounting for half of the 0.4% gain in overall production. Manufacturing activity was stronger than the 0.1% monthly gain would suggest, as autos held back activity. Still, we are cautious to expect this will be sustained as unfavorable conditions will limit a recovery in manufacturing for some time. Upside Surprise Traced to Mining, but Manufacturing Stronger While most data continue to point to a U.S. industrial sector that is stalling or in contraction, the August industrial production data surprised to the upside, with total output rising 0.4%. That, however, comes after downward revisions to the prior month (now up 0.7% from a previously reported 1.0% rise) and is somewhat explained by a pop in the volatile mining industry. Mining output rose 1.4% last month (due to a +3% gain in oil & gas extraction specifically), or by the fastest in seven months and was responsible for half of the overall gain in output (chart). But gains were fairly broad based in August. Utilities also registered a decent gain made more impressive on top of a blow-out July, rising 0.9%. Manufacturing, which is by far the biggest component of industrial production representing nearly three-quarters of output, was up a modest 0.1%. READ FULL ARTICLE >>