With Hurricane Isaac restraining output in the Gulf Coast region, the Federal Reserve released a report on Friday showing a much steeper than expected drop in industrial production in the month of August.
The report showed that industrial production tumbled by 1.2 percent in August following a downwardly revised 0.5 percent increase in July.
Economists had expected production to edge down by 0.1 percent compared to the 0.6 percent growth originally reported for the previous month.
The Fed said the restrained output in the Gulf Coast region as a result of Hurricane Isaac reduced the rate of change in total industrial production by an estimated 0.3 percentage points.
Precautionary shutdowns of oil and gas rigs in the Gulf in advance of the hurricane contributed to a 1.8 percent drop in August mining output, the Fed said. Mining output rose by 1.0 percent in July.
Utilities output plunged by an even more substantial 3.6 percent in August after climbing by 1.3 percent in July, while manufacturing output fell by 0.7 percent after rising by 0.4 percent in each of the two previous months.
The report also showed that capacity utilization fell to 78.2 percent in August from a downwardly revised 79.2 percent in July.
The capacity utilization rate had been expected to edge down to 79.2 percent from the 79.3 percent originally reported for the previous month.
Capacity utilization in the manufacturing sector fell to 77.0 in August from 77.7 in July, while capacity utilization in the mining and utilities sectors dropped to 88.6 percent and 73.3 percent, respectively.
by RTT Staff Writer
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