US industrial production shrinks most since March 2009

Industrial production in the US contracted most in August since March 2009, reinforcing concern of a slowdown in the growth engine.

The 1.2-per cent decline in factories, mines and utilities came on the back of a 0.5 per cent gain in the prior month, according to figures from the Federal Reserve yesterday.

A slowdown in global markets was seen  hurting the order books which would likely make it tougher for companies like Texas Instruments Inc and Dow Chemical Co to expand sales.

Manufacturing might also suffer due to weaker consumer spending in the face of unemployment exceeding 8 per cent and the looming fiscal US cliff of tax as also government spending changes.

According to some analysts, manufacturing was clearly decelerating, and a decline in industrial production was expected. They point out that the numbers clearly showed weakness and manufacturing's contribution to the economy falling.

Output in the Gulf Coast region was hit by Hurricane Isaac at the end of August, with production suffering an estimated 0.3 percentage point, according to the Fed.

Hurricane Isaac limited output in the Gulf Coast region at the end of August, reducing the nation's industrial production by an estimated 0.3 percentage point, the Fed said today.