September 14, 2012 / 1:27 PM / 5 years ago

Industrial output drops most in three years on factories, storm

Louisville Assembly Plant employees work to assemble the new 2013 Ford Escape on the production line at the company's newly transformed Louisville Assembly Plant in Louisville, Kentucky, June 13, 2012. REUTERS/John Sommers II

WASHINGTON (Reuters) - Industrial output fell in August by the most in over three years as production slowed in factories and a hurricane temporarily shut down oil and natural gas rigs in the Gulf of Mexico.

Industrial production fell 1.2 percent, the Federal Reserve said on Friday. That was the steepest decline since March 2009. Analysts polled by Reuters had expected industrial output to be flat last month.

In March 2009, when the U.S. economy was still languishing in recession, industrial output declined by 1.7 percent.

The decline was driven by a 0.7 percent drop in factory output, a sign that the cooling global economy appears to be holding back growth in America’s manufacturing sector.

The Fed estimated that Hurricane Isaac, which hit the Gulf Coast last month, contributed about 0.3 percentage point to the overall fall in output.

The storm dragged on mining output, which declined by 1.8 percent in August.

Industrial production encompasses output from factories, utilities and mining operations, including oil and natural gas production.

Utilities output declined 3.6 percent in August.

Capacity utilization, a measure of how fully firms are using their resources, was at 78.2 percent in August, below forecasts and declining from 79.2 percent in July.

Reporting by Jason Lange; Editing by James Dalgleish

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