US Manufacturing Production Rises

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U.S. factory production increased for a fourth straight month in August, but the recovery is showing signs of strain, suggesting business investment in equipment could remain depressed through the end of the year as the COVID-19 pandemic drags on.
 
The report from the Federal Reserve on Tuesday added to data on the labor market that has indicated a stall in overall economic activity because of the coronavirus' persistence and fading fiscal stimulus. The ebbing economic recovery, accompanied by firming inflation, is likely to dominate the U.S. central bank's two-day policy meeting, which started on Tuesday.
 
"It is looking increasingly like the recovery in factory production will stall in coming months if no one from Washington is going to ride to the rescue with another pandemic stimulus package," said Chris Rupkey, chief economist at MUFG in New York. "The coronavirus has made the public cautious and this uncertainty is keeping factories from opening back up completely."
 
Manufacturing production rose 1.0% last month after advancing 3.9% in July. The Fed noted that "the gains for most manufacturing industries have gradually slowed since June." Factory output remains 6.7% below its February level.
 
Government financial aid to businesses and the unemployed has virtually dried up, and talks on another package are at an impasse. At least 29.6 million people were on unemployment benefits in August. Government money was credited for the sharp rebound in economic activity. Cheaper crude oil because of the pandemic is also hurting oilfield services and equipment firms.