A long-awaited 0.2 percentage point downturn in the frenzied pace of industrial output finally came in September, the Federal Reserve reports, an indication the economy may be cooling.
Output from the nation's factories, mines and utilities decreased 0.2 percentage point in September to 83.6 percent, the Fed said. Last month the revised rate of 83.8 was higher than at any time since March 1980.This rate is closely watched by federal regulators for indications that factories are reaching the limit of what they can produce without either expanding or becoming unable to meet demand.
Resulting shortages could set off a spurt of price increases.
The easing in September was mainly due to a sharp drop in utility operating rates after the exceptionally hot summer, from 83.6 percent of total capacity to only 79.9 percent, the Fed said.
Factory operating rates were little changed in September for the second month in a row at 83.8 percent of capacity, after peaking at 83.9 percent in June, with rates for both primary and advanced processing plants holding steady, the Fed said.
Mines were operating at a brisker 83.1 percent pace in September, after dipping to 82.8 percent in August, the Fed said.
Because factories are still grinding up against historically high operating rates, the central bank may be inclined to keep interest rate pressure on to curb demand and give factories some breathing room.
Within the manufacturing sector, most industries showed relatively little change in operating rates in September, the Fed said. Producers of heavy equipment kicked up their rates a little, while the rates for manufacturers of such quickly consumed items as food and clothing eased slightly.
The largest increase came at automobile assembly plants, where operating rates rose 3.6 percentage points.
Operating rates for both fabricated metal products and nonelectrical machinery also increased in September, bringing increases in operating rates in these industries to more than 6 percentage points in the past year.