U.S. August Industrial Production - Surprising dip in manufacturing
August industrial production was unchanged with a very surprising 0.3% decline in manufacturing, its first decline since three straight declines were seen in Q4 of 2025. While one month does not make a trend the manufacturing losses were broad based and thus not easy to dismiss.
Autos are often a volatile series in the summer after July’s annual retoolings and fell by 1.0% in August, a third straight decline. The trade war with Canada is a growing risk here. Manufacturing ex autos fell by 0.2% while manufacturing fell by 0.3% excluding selected high tech industries. Business equipment, which has recently been trending strongly, fell by 0.5% after a 1.0% rise in July.
Mining saw a marginal 0.1% increase for a second straight month but a 1.3% rise in utilities lifted overall industrial production to unchanged, supported by exceptionally hot weather.
There have been a few hints that strong manufacturing expansion, fueled by AI, is losing a little momentum, in recent durable goods orders reports and some (though not all) manufacturing surveys, but none implied negative manufacturing output. The fall is probably at least in part erratic, but any further signs of fading momentum should be watched.
