U.S. industrial production fell sharply in July, the Federal Reserve said Thursday, pointing to a larger-than-expected impact from Hurricane Beryl.
The news is likely to add to calls for the Fed to cut its key lending rate from a two-decade high next month as its long-running campaign against inflation continues to percolate through to the broader economy.
Total industrial output contracted by 0.6% in July from a month earlier when it rose by a revised figure of 0.3%, the U.S. central bank said in a statement.
This was sharply below market expectations of a 0.1% increase, according to Briefing.com.
The Fed said industrial production had been held down by the early "July shutdowns concentrated in the petrochemical and related industries due to Hurricane Beryl," which came ashore in Texas.
The manufacturing sector experienced a 0.3% decline due to a plunge of almost 8% in the index for motor vehicles and parts.
Excluding this component, the manufacturing index actually increased by 0.3%, the Fed said.
Meanwhile, the mining index was unchanged, and the utilities index slumped by 3.7%.
"Normally, manufacturing snaps back after a disaster related temporary shutdown," economists at High Frequency Economics (HFE) wrote in a note to clients on Thursday. "So the results are not as bad as they look."
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