US industrial output up in August as manufacturing rebounds

Ty Wright | Bloomberg | Getty Images

A welder builds parts for finished petroleum tanks at Southern Tank and Manufacturing Inc. in Owensboro, Kentucky, U.S.

U.S. industrial production rose in August as a bounce back in motor vehicle assembly lifted manufacturing output, a hopeful sign for the economy after growth got off to a slow start in the third quarter.

Industrial output increased 0.4 percent last month after being flat in July, the Federal Reserve said on Monday. The rise was in line with economists' expectations.

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Manufacturing production advanced 0.7 percent, reversing the prior month's 0.4 percent drop, as automobile assembly rebounded 5.2 percent after slumping 4.5 percent in July.

Factory activity hit a speed bump early in the year. The industrial production report pointed to some underlying momentum, which could support views of only a mild slowdown in economic growth this quarter.

Gains in industrial production were almost broad-based in August, though utilities output fell for a fifth consecutive month.

Mining production rose 0.3 percent last month, but that was a big step back from July's 2.4 percent increase.

Last month, the amount of industrial capacity in use edged up to 77.8 percent from 77.6 percent in July.

Industrial capacity utilization — a measure of how fully firms are using their resources — was 2.4 percentage points below its long-run average.

Officials at the Fed tend to look at utilization measures as a signal of how much "slack" remains in the economy, and how much room growth has to run before it becomes inflationary.