Industrial production in the U.S. unemployment unexpectedly showed a modest decrease in the month of July, according to a report released by the Federal Reserve on Thursday.
The Fed said industrial production edged down by 0.2 percent in July following a revised 0.2 percent increase in June.
Economists had expected industrial production to rise by 0.2 percent compared to the unchanged reading originally reported for the previous month.
The unexpected drop in production was partly due to a pullback in manufacturing output, which fell by 0.4 percent in July after climbing by 0.6 percent in June.
The report also showed a 1.8 percent slump in mining output, as Hurricane Barry caused a sharp but temporary decline in oil extraction in the Gulf of Mexico.
On the other hand, utilities output showed a substantial rebound, spiking by 3.1 percent in July after plunging by 3.3 percent in June, as a brief heatwave on the east coast boosted demand for air conditioning.
“The soft July industrial production data show that the manufacturing recession continued into the third quarter,” said Andrew Hunter, Senior U.S. Economist at Capital Economics.
He added, “But the latest surveys provide some reason for optimism and, as the retail sales data released earlier today highlight, there is still little evidence that this malaise is spreading to the wider economy.”
The Fed also said capacity utilization for the industrial sector dipped to 77.5 percent in July from a revised 77.8 percent in June.
Economists had expected capacity utilization to slip to 77.8 percent from the 77.9 percent originally reported for the previous month.
Capacity utilization in the utilities sector rose to 76.6 percent, while capacity utilization in the manufacturing and mining sectors dropped to 75.4 percent and 89.2 percent, respectively.