Latest News

The US manufacturing industry stalls production in July

The US manufacturing industry stalls production in July

The U.S. factory output was unchanged in the month of July, suggesting that manufacturing activity is stalling while businesses deal with higher import tariff costs.

The Federal Reserve reported a flat reading for manufacturing output on Friday, following a 0.3% rise in June that was upwardly revised.

The economists polled had predicted that production in the sector, which represents 10.2% of GDP, would decline by 0.1%, following a 0.1% increase reported previously in June. In July, the production at factories increased by 1.4% compared to last year.

The output of motor vehicles and parts fell by 0.3% in July after a 2.5% drop in June. In July, automakers typically close production lines for maintenance and new model development as well as the summer break. The factory output, excluding motor vehicles fell by 0.1% in July after increasing 0.5% in June.

Citigroup economist Veronica Clark said that tariffs on steel and aluminum could lead to longer or wider-spread shutdowns in the summer.

Donald Trump has imposed 50% duties on steel and aluminium, as well as 25% taxes on motor vehicles and their parts. Trump has justified the duties by claiming that they are necessary to revive the long-declining U.S. industry base. However, economists say this cannot be achieved in a short time period, citing the high production costs and labor costs.

The production of furniture, miscellaneous transport equipment, and electrical appliances, as well as furniture, and other related products, increased. The production of machinery and primary metals declined. Durable goods manufacturing increased by 0.3%.

The nondurable manufacturing sector saw a 0.4% decline in production, which was reflected across all categories.

The mining output dropped 0.4% in August after falling 0.3% the previous month. Utilities production slid 0.2%. This followed a surge of 1.8% in June.

The overall industrial production dropped by 0.1% in July after increasing 0.4% in June. The industrial output increased 1.4% year-over-year.

The capacity utilization rate for the industrial sector has fallen to 77.5%, down from 77.7%. This is 2.1 points below the average for 1972-2024. The manufacturing sector's operating rate dropped to 76.8% in July from 76.9%. This is 1.4% below the long-term average. Lucia Mutikani, Andrea Ricci and Andrea Ricci (Reporting)

(source: Reuters)