Manufacturing slipped in August on decline in auto production

Manufacturing dropped 0.4 percent in August, the first decline since January, as auto plants reduced production.

Overall, industrial production fell 0.1 percent last month, also the first drop since the first month of the year, the Federal Reserve said Monday. 


The declines reflected a 7.6 percent decrease in auto production after a 9.3 percent increase in July.

“The August decline in manufacturing production should not be a cause for concern — the correction was predictable and centered on motor vehicle production,” said Daniel Meckstroth, chief economist for the MAPI Foundation, the research affiliate of the Manufacturers Alliance for Productivity and Innovation.

Usually automakers shut down plants in July for retooling, but that didn't happen this year, so August looked slower than normal.

Excluding motor vehicles and parts, factory output rose 0.1 percent in both July and August.

Mining production was up 0.5 percent in August, and the output of utilities rose 1 percent.

At 104.1 percent of its 2007 average, total industrial production in August was 4.1 percent above its year-earlier level.

“Manufacturing is fundamentally strong and will grow faster than the overall economy this year and next,” Meckstroth said.

Capacity utilization decreased 0.3 percentage point in August to 78.8 percent, a rate 1 percentage point above its level of a year earlier and 1.3 percentage points below its long-run (1972–2013) average.