WASHINGTON -- U.S. industrial production slowed to a 0.4% gain in August as shutdowns of petroleum refineries and petrochemical plants caused by Hurricane Ida curbed manufacturing activity.
Plant closures along the Gulf Coast, as well as lost oil production during last month's hurricane, shaved 0.3 percentage points from output, the Federal Reserve reported Wednesday. Industrial output had risen a revised 0.8% in July.
Industrial production covers manufacturing, utilities and mining. For just manufacturing, factory output slowed to a tiny 0.2% gain, reflecting the hurricane impact and continuing supply chain problems. Factory output had risen a much stronger 1.6% in July.
Manufacturing has been hobbled this year because of snarled supply chains, particularly at auto plants where semiconductors needed for new cars have been in short supply.
Economists said problems including labor shortages due to the resurgence of covid-19 cases at home and abroad continue to depress manufacturing activity.
Andrew Hunter, senior U.S. economist at Capital Economics, said rising infection rates in Asia appeared to be a key reason that Ford and General Motors were forced to announce expanded plant shutdowns in September amid a worsening semiconductor shortage.
Ford, which has lost money in India for a decade, said this month that it was pulling the plug on production for good in the country.
"The industrial recovery is losing steam and with the delta variant causing disruption to global supply chains and Hurricane Ida weighing on oil production, a further slowdown looks likely in September," Hunter said.
For August, output in auto plants was up a scant 0.1% after a much stronger 9.5% gain in July.
Output at the nation's utilities rose 3.3% in August because of unseasonably hot weather while output in mining was down 0.6%, reflecting a drop in crude oil extraction in the Gulf of Mexico related to Ida, which hit Louisiana on Aug. 29.
The nation's factories, mines and utilities operated at 76.4% of capacity in August, up slightly from 76.2% in July.
With the 0.4% gain in industrial production in August, output is 5.9% higher than it was in August 2020 and 0.3% above its pre-pandemic level in February 2020.
Producers around the world are raising prices amid soaring costs for commodities and shipping. A separate report out last week showed prices paid to producers in China jumped in August from a year earlier by the most in 13 years.
Costs are increasing earlier in the U.S. production pipeline as well. Processed goods for intermediate demand, which include materials and components used in manufacturing and construction, rose 1% in August and were up 23% from 12 months ago, a fresh 46-year high.
Information for this article was contributed by Olivia Rockeman of Bloomberg News (WPNS).