2016.09.1509:59:00UTC+00U.S. Industrial Production Pulls Back More Than Expected In August

Reflecting pullbacks in manufacturing and utilities output, the Federal Reserve released a report on Thursday showing that U.S. industrial production fell by more than expected in the month of August.

The Fed said industrial production dropped by 0.4 percent in August after climbing by a revised 0.6 percent in July.

Economists had expected production to dip by 0.2 percent compared to the 0.7 percent increase that had been reported for the previous month.

The bigger than expected drop in production in August was partly due to a 0.4 percent decline in manufacturing output, which reversed the increase seen in July.

Andrew Hunter, U.S. Economist at Capital Economics, said, "That fall in manufacturing output wasn't a huge surprise given the already-reported decline in total employee hours worked, as well as the renewed slump in the ISM manufacturing index back below the 50 mark in August."

"Indeed, despite the strong gains in June and July suggesting that the sector was starting to recover from the dollar's prior appreciation, it appears that manufacturing activity is still struggling to make any headway," he added.

Utilities output also tumbled by 1.4 percent in August after jumping by 2.1 percent in July and 2.9 percent in June.

The Fed noted that utilities output was still up by 1.7 percent year-over-year, as hot temperatures this summer boosted the usage of air conditioning.

The report also said mining output surged up by 1.0 percent in August following a 0.2 percent uptick in July. Mining output rose for the fourth straight month following an extended downturn.

Meanwhile, the Fed said capacity utilization for the industrial sector fell to 75.5 percent in August from 75.9 in July. The rate is 4.5 percentage points below its long-run average.

While capacity utilization in the mining sector rose to 76.2 percent, capacity utilization in the manufacturing and utilities sectors dipped to 74.8 percent and 80.4 percent, respectively.