U.S. Industrial Production Falls 0.3% in August

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U.S. industrial production dropped for the first time this year in August, the Federal Reserve reported Tuesday.

The 0.3% drop in production at the nation's factories, mines and utilities – which means less business for many motor carriers -- followed a revised 0.4% increase in July, and surprised analysts who expected a 0.2% increase, Bloomberg said.

"Manufacturing was doing well because of inventory building but that correction is now nearing an end," said Bob Costello, American Trucking Associations chief economist. "This means subdued growth for trucking ahead."

The factory plant-use rate fell from 76.2% to 76% in August, suggesting that businesses have plenty of room to increase production without having to build more factories or buy more equipment, Bloomberg said.

Analysts told Bloomberg the economic recovery will remain weak until capital spending picks up. However, that is not expected to happen until there is a strengthening in demand that is sustainable and some of the excess capacity gets used up, Bloomberg said.

The Fed said August’s decline was due to manufacturers producing fewer vehicles, appliances and home electronics products. Work at factories, which accounts for almost 90% of industrial production, fell 0.1% in August.