U.S. industrial production in September failed to rise for the first time in seven months, the government said Friday, suggesting to economists that the overheated manufacturing sector is cooling a bit.
The Federal Reserve Board said output at the nation's factories, mines and utilities was unchanged last month after increasing a slight 0.2 percent in August and an unusually large 1.2 percent in July.The production index has gone 12 months without a decline, but September was the first time since February that it did not rise.
David Wyss, an economist with Data Resources Inc., a Lexington, Mass., forecasting firm, said the weakness in September was almost entirely due to cutbacks at electricity plants.
"There was a 4.3 percent drop in utility production because people weren't using their air conditioners as much," he said. Utility output shrank to nearly the May level, before the summer heat wave.
But even without the drop in utilities, production expanded slowly last month. It was up only 0.2 percent at manufacturing plants, following a 0.1 percent rise in August. Mining output, which includes oil and gas drilling, was up 0.2 percent following a 0.8 percent decrease.
Manufacturing has been the star of the economy this year. The lower value of the dollar has made American goods less expensive on overseas markets and fueled an export boom.
The boom was so vigorous that analysts this summer began worrying that factories wouldn't be able to keep up, leading to shortages and price increases.
However, Wyss said, "The fear that the economy was overheating proved to be rather overheated."
Michael K. Evans, an economic consultant in Washington, said U.S. export sales in 1989 will not be able to sustain the rapid growth of this year.
A survey released by Dun & Bradstreet Corp. earlier this week showed that plant managers' expectations for increased orders declined for the second quarter in a row.
"Manufacturers see their orders shriveling up and they've decided, `Hey, it's time to cut back,"' Evans said.
Within the manufacturing sector, production of durable goods - "big ticket" items expected to last three or more years - was up 0.3 percent, while non-durables were up 0.2 percent.
Auto production jumped to 7.4 million units, from 7.0 million in August.
Business equipment, particularly machinery purchased by manufacturers seeking to gear up for the export boom, has been one of the strongest sectors of the economy. Production in September rose 0.4 percent to a level 10 percent higher than a year ago.
There was also strength in non-electrical machinery and chemicals, but steel production fell for the second consecutive month after rising sharply in July.