US manufacturing continues to sink in July amid trade war, oil crisis

US manufacturing continued its steady decline in July amid the ongoing trade war with China and slowing global economy, while the hurricane-hit oil sector also helped drag down total output, the Federal Reserve said on Thursday.

Production fell across the board in US manufacturing, with only rare bright spots, dropping 0.4 percent compared to June. The sector has fallen in four of the last six months and is down 1.5 percent so far this year, according to data.

Total industrial production fell 0.2 per cent, erasing the gain in June, and defying analysts who had expected a slight uptick, according to the report.

Output also was pulled down by the 1.8 percent drop in mining after Hurricane Barry "caused a sharp but temporary decline in oil extraction in the Gulf of Mexico," the Fed said.

The volatile utilities sector jumped 3.1 percent last month as summer heat increased the need for air conditioning, nearly offsetting the sharp drop in June.

Overall output is still 0.5 percent higher that a year ago but manufacturing has seen two quarters of contraction, meaning the sector is in recession.

The only sizable increase in manufacturing was in aerospace and miscellaneous transportation equipment.

Industrial capacity in use retreated again, falling back to 77.5 percent, far below the long-run average, the report said.