US Factory Production Falls Unexpectedly Amid Higher Oil Prices
US factory production unexpectedly fell by 0.3% in August, following seven consecutive months of increases. The decline was led by a 0.5% drop in the production of long-lasting manufactured goods.
The Federal Reserve reported that oil prices are hovering above $100 a barrel with no end in sight to the US-Israeli war with Iran, and interest rates have been raised for the first time in three years. This could offset some of the support from an artificial intelligence buildout, likely keeping activity moderate for the rest of the year.
According to Samuel Tombs, chief US economist at Pantheon Macroeconomics, 'Some manufacturers likely will find that demand softens as they pass on higher energy prices to consumers.'
The manufacturing output advanced 0.9% on a year-over-year basis in August, but economists are still concerned about the impact of rising costs and geopolitical risks.