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US output dips in August, driven lower by automobiles

Robots weld the frames of Honda Odyssey minivans at the Honda Manufacturing of Alabama facility in Lincoln, Alabama.
Luke Sharrett | Bloomberg | Getty Images
Robots weld the frames of Honda Odyssey minivans at the Honda Manufacturing of Alabama facility in Lincoln, Alabama.

U.S. manufacturing output fell for the first time in seven months in August as motor vehicle production declined, but the underlying trend remained consistent with steadily rising factory activity.

Factory production dropped 0.4 percent last month after a downwardly revised 0.7 percent increase in July, the Federal Reserve said on Monday.

Economists polled by Reuters had forecast manufacturing output rising 0.3 percent in August after a previously reported 1.0 percent advance.

Excluding automobiles, manufacturing production gained 0.1 percent in August after rising by the same amount in July.

Motor vehicle output declined 7.6 percent after a hefty 9.3 percent jump in July.

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Mining output increased 0.5 percent in August, while utilities production rebounded 1.0 percent.

That helped to cushion the drag from manufacturing, leaving overall industrial production falling only 0.1 percent in August. July's increase in industrial output was revised down to 0.2 percent from 0.4 percent.

The amount of manufacturing capacity in use fell to 77.2 percent last month from 77.6 percent in July.

Overall industrial capacity use declined to 78.8 percent from 79.1 percent in July. It was 1.3 percentage points below its long-run average.

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Officials at the Fed tend to look at capacity use as a signal of how much "slack" remains in the economy and how much room there is for growth to run before it becomes inflationary.

--By Reuters