US sees slower Manufacturing in aug

Factory production cooled in August, pointing to a slower pace of growth as the US struggles to sustain a recovery from the worst recession since the 1930s.

Industrial output rose 0.2 per cent after a 0.6 per cent gain in July that was smaller than previously estimated, figures from the Federal Reserve showed today. Manufacturing in the New York region expanded this month at the slowest pace in more than a year, according to another report from the central bank.

“The recovery has lost some of its upward momentum, but does not appear to be in any imminent danger,” said David Resler, chief economist at Nomura Securities International Inc. in New York. “We’re getting weak growth, but growth.”

Ford Motor Co is among companies not looking to boost US output on concern a lack of jobs will hold back consumer spending, which accounts for about 70 per cent of the world’s largest economy. Orders from overseas and the need for some companies to replace outdated equipment are supporting other manufacturers including Caterpillar Inc.

Stocks fluctuated between gains and losses as speculation that takeovers will accelerate helped ease concern about the strength of the recovery. The Standard & Poor’s 500 Index fell 0.1 per cent to 1,120.04 at 11.20 am in New York. Treasury notes advanced for a third day, led by five-year securities, on speculation Japan will buy shorter-term US debt after selling the yen for the first time since 2004 to support its economy.

Empire State
The Fed Bank of New York’s so-called Empire State index fell to 4.1 this month, the lowest reading since July 2009, from 7.1 in August. Readings greater than zero signal expansion. Measures of orders, sales and employment all improved, signalling the drop was mainly a reflection of waning confidence.

The cost of goods imported into the US rose 0.6 per cent in August, more than forecast, as crude oil and food costs jumped, masking contained inflation elsewhere, Labor Department figures also showed today.

Economists forecast industrial production would increase 0.2 per cent after an originally reported 1 per cent jump in July, according to the median of 78 projections in a Bloomberg News survey. Estimates ranged from a 0.3 per cent drop to a gain of 0.5 per cent.

Capacity utilisation, which measures the amount of a plant that is in use, increased to 74.7 per cent last month from 74.6 per cent in July. The gauge averaged 80 per cent over the past 20 years, showing there’s enough spare plant equipment and space to prevent bottlenecks that would lead to higher prices.

Ford’s plans
Dearborn, Michigan-based Ford has no plans to increase production of any of its current models because demand is fragile in the weak economic recovery, George Pipas, the automaker’s sales analyst, said in an interview last month. The automaker plans to build 570,000 vehicles in the fourth quarter, the same as this quarter.

The growth in manufacturing last month was paced by gains in production of business equipment that point to continued improvement in investment by companies in the US or overseas. Production of technological gear, including computers, semiconductors and communications equipment rose 1 per cent.

Slowing household demand is prompting some companies to cut forecasts. Intel Corp last month reduced its third-quarter revenue projection.