U.S. industrial output plunged in August at the fastest pace in three years, the government reported Monday, and September might not be much better as the economy struggles with the worst financial turmoil in a generation. U.S. industrial production fell 1.1 percent—nearly four times the amount that had been expected—due to a big decline in auto production and a drop in utilities output that was attributed to mild temperatures, the Federal Reserve (Fed) reported. Production of autos and auto parts fell 11.9 percent in August, reflecting the difficulties in the North American car market. Utility output fell 3.2 percent on cooler temperatures, and production in mines fell 0.4 percent. Precautionary shutdowns in the Gulf of Mexico ahead of Hurricane Gustav reduced refinery activity and oil and natural-gas extraction, but the effect on total industrial production was less than 0.1 percent, the central bank said. Factory capacity utilization fell slightly to 78.7 percent, the lowest level since October 2004. Capacity utilization is 2.3 percentage points below its 25-year average, the Fed said. On Wall Street, the Fed report intensified fears that the U.S. economy is still near recession even though gross domestic product (GDP) growth was a solid 3.3 percent in the second quarter.
