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US industrial production continues expansion in August

By AFP - Sep 17,2023 - Last updated at Sep 17,2023

A robot lifts the battery as it is istalled on the frame of Ford Motor Company battery powered F-150 Lightning trucks under production at their Rouge Electric Vehicle Centre in Dearborn, Michigan, on September 20, 2022 (AFP photo)

WASHINGTON — US industrial production kept expanding in August, the Federal Reserve (Fed) said on Friday, beating expectations even though the pace of the increase slowed due to sluggish manufacturing growth.

Overall industrial production rose by 0.4 per cent, up from a revised 0.7 per cent a month earlier, the Fed announced in a statement. 

This was above the median expectation of economists surveyed by MarketWatch. 

The August reading for manufacturing was up just 0.1 per cent, "held back" by a 5 per cent decline in motor vehicles and parts, the Fed said. 

This marked a sharp turnaround from July, when a jump in motor vehicle production helped spur a 0.4 per cent increase in manufacturing, pushing industrial production back into positive territory.

"Overall industrial production rose more than expected in August but manufacturing output matched consensus expectations," High Frequency Economics Chief US Economist Rubeela Farooqi wrote in a note to clients.

"Higher borrowing costs and weaker demand for goods are headwinds for manufacturing," she added. 

Factory output rose by 0.6 per cent, while the index for mining was up 1.4 per cent from a month earlier.

Year-on-year, overall industrial production expanded by 0.2 per cent. 

The figures will give the Fed additional information ahead of its interest rate decision next week, as it weighs another hike to its key lending rate to cool above-target inflation.

However, traders and analysts expect the US central bank to announce it is holding rates steady on Wednesday to give policymakers more time to assess the health of the world's largest economy. 

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