U.S. Factory Production Retreated in August as Autos and Aerospace Lead Decline

U.S. manufacturing production fell in August for the first time this year, as declines in motor vehicles and aerospace led a broader retreat across several sectors.

Factory output dropped 0.3 percent after rising 0.2 percent in July, the Federal Reserve said Friday. The decline ended seven consecutive monthly increases, although manufacturing production remained 0.9 percent above its year-earlier level.

Transportation equipment was a major drag. Production of motor vehicles and parts fell 1.2 percent, following a 0.8 percent decline in July. Aerospace and miscellaneous transportation equipment also dropped 1.2 percent, reversing much of the previous month’s 1.4 percent gain.

Together, those two industries accounted for approximately half the manufacturing decline, based on a calculation using the Fed’s published industry weights and rounded monthly changes. The industry breakdown shows that transportation’s weakness coincided with smaller declines across a range of other manufacturers.

Motor vehicle assemblies slowed to a seasonally adjusted annual rate of 10.43 million units from 10.81 million in July, marking a third consecutive monthly decline. Both car and truck assemblies fell, according to the Fed’s assembly figures.

The weakness extended beyond the auto industry. Manufacturing output excluding motor vehicles and parts fell 0.2 percent. Durable manufacturing, which includes longer-lasting products such as vehicles, machinery and appliances, declined 0.5 percent overall.

Furniture production fell 1.4 percent, nonmetallic mineral products dropped 1.1 percent, and plastics and rubber products declined 0.9 percent. Primary metals slipped 0.3 percent, while fabricated metal products edged down 0.1 percent.

Technology manufacturing also cooled. Computer and electronic products output fell 0.5 percent. In the Fed’s more detailed figures, computers and peripheral equipment dropped 1.4 percent and semiconductor production slipped 0.1 percent. Communications equipment rose 0.8 percent, leaving the Fed’s selected high-technology aggregate unchanged after a 1.3 percent increase in July. That aggregate nevertheless remained 12.5 percent above a year earlier, the detailed production data showed.

Measured by the intended use of goods, business equipment production fell 0.5 percent, defense and space equipment dropped 1.2 percent, and construction supplies declined 0.7 percent.

Some industries continued to expand. Machinery production rose by 0.5 percent, while food, beverage, and tobacco output increased by 0.3 percent. Apparel and textiles also posted gains. Electrical equipment, appliances and components were unchanged. Nondurable manufacturing as a whole was flat.

Overall industrial production, which includes utilities and mining alongside manufacturing, was unchanged. A 1.8 percent increase in utility output and a 0.1 percent gain in mining offset the factory decline.

Manufacturing capacity utilization fell to 75.7 percent from 76.0 percent in July, its lowest reading since March and 2.5 percentage points below its long-run average, according to the Fed report.