U.S. Industrial Production Falls 0.2%

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The FINANCIAL — U.S. industries scaled back production in September as a weak global economy continued to suppress demand for American-made goods, according to Nasdaq.

Industrial production-a broad measure of everything made by factories, mines and utilities-fell a seasonally adjusted 0.2% in September from a month earlier, the Federal Reserve said on October 16.

That marked the second consecutive monthly decline, though August’s drop was less steep than initially reported. Production slipped 0.1% that month instead of the first estimate of 0.4%, reflecting an upward revision to mining output.

Capacity utilization, reflecting how much industries are producing relative to their potential output, fell to 77.5% in September from 77.8% in August. Before the recession, capacity use was typically running around 80%.

Economists surveyed by The Wall Street Journal had expected a 0.2% drop in industrial production and capacity use of 77.3% in September.

The figures are the latest sign that the strong dollar, depressed oil prices and weak demand from Chinese and European customers are hurting sales at U.S. factories. Factory output-representing nearly three-quarters of overall production- fell 0.1% last month after falling 0.4% in August.

At the same time, depressed oil prices have led to a sharp decline in energy exploration. Mining output, which includes energy exploration, fell 2% in September after a flat reading in August.

Utility output increased 1.3% in each of the past two months.

From a year earlier, overall industrial production was up 0.4% and factory output was up 1.4%.

The effects of the global slowdown have intensified in recent months amid growing concerns about the health of China and other emerging-market economies. Meanwhile, the sharp fall in oil prices over the last 15 months has caused a slowdown in energy exploration in the U.S. and led to fewer orders for drilling equipment.

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The outlook for manufacturing isn’t entirely negative. Auto sales have been booming this year as Americans take advantage of low-interest loans to replace older vehicles. Friday’s report showed production of cars and related parts continued to pick up in the third quarter, offsetting declines in other types of goods.

The broader factory slowdown appears to have dragged down the economy. Many private-sector economists estimate the economy grew at around a 1% annual rate in the third quarter, down from the second quarter’s 3.9% pace. Growth is expected to rebound slightly in the final months of the year to around a 2% pace.


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