Manufacturing Sector Gets Momentum

Factory output 1Factory output in the United States increased in August as the rate of motor vehicles assemblies reached a six year high. These were seen as a good sign for the economy after a slow start of the third quarter. But not everything is good news. Last Monday, another report was released that showed a small decline in factory activity in New York state this month. But despite that, businesses were upbeat about their outlook. Readings of new orders and shipments in New York increased, which indicated an upward trend in manufacturing after slowing down in spring.

Manufacturing production increased 0.7 percent according to the Federal Reserve. The gain was more than the drop of 0.4 percent from the previous month. It helped improve the overall industrial production by 0.4 percent.

The New York Federal Reserve said that its Empire State general business conditions index dropped to 6.29 in September from 8.24 the previous month. A reading above zero shows expansion. Economists warned against reading too much in the manufacturing sector’s rally. They said that it was not a reliable indicator of national manufacturing.

Another report showed that new orders increased after stalling in August. Shipments went up to their highest level in more than a year.

The improvement in industrial output in August was a result of momentum in factory activity that supported views of a small slowdown in economic growth in the current quarter. It should allow the Federal Reserve to announce cuts to its stimulus program when its policy makers meet Tuesday and Wednesday to assess the health of the economy.

The gains in manufacturing output in August were led by the 5.2 percent gain in auto assemblies from the 4.5 percent drop in July. It was the largest increase since November. Assemblies churned out 11.25 million units, which is the highest since June 2007.