Industrial Production Growth Slowed in August as Caution Increases Regarding Economic Slowdown

Industrial production in August grew slightly slower than expected, rising +.2% MoM (consensus +.3%). But, July's figure was revised higher to +.5% MoM from the previously reported gain of +.3%. In addition, capacity utilization held steady at 82.2% (consensus 82%) after being revised higher last month from an originally reported level of 81.9%. Over the last thirty years, capacity utilization has averaged around 81%.

Economists have been expecting companies to begin scaling back production in anticipation of slowing sales due to the housing market declines, and anticipated retrenchment by consumers. The recent tightening of credit in the CP markets may also cause companies to desire to reduce inventory positions they need to fund with short-term borrowings. Nationwide, factory output fell -.3% MoM in August after rising +.7% MoM in July, with consumer durable goods production falling 1% MoM. Motor vehicle production fell -3.7% MoM in August as manufacturers announced further production cuts for the remainder of 2007. Utility production rose on the warmer than normal weather.