CHICAGO (Dow Jones/AP) — Manufacturing output in the Midwestern dropped in August, indicating that intensifying credit market troubles dragged on broader economic activity.
The Federal Reserve Bank of Chicago reported Thursday that its Midwest Manufacturing Index fell 0.3 percent in August to a seasonally adjusted level of 105.6. The Chicago Fed also revised downward its index of July manufacturing activity to 105.9, from 106.0.
The index uses hours to calculate monthly changes in manufacturing activity for Illinois, Indiana, Iowa, Michigan and Wisconsin.
The August figure was in line with the Federal Reserve Board's industrial production index for manufacturing, which also was down 0.3 percent.
Despite the monthly decline, August output was 0.1 percent above year-ago levels but lagged behind a 1.6 percent annual increase in national manufacturing.
The Chicago Fed said regional machinery output registered the sharpest decline, down 0.9 percent in August, from a 1.6 percent July increase. National machinery activity fell by just 0.2 percent in August. On annual basis, regional machinery output was 1.2 percent below August 2006 levels, while national machinery activity was up 5.6 percent.
Midwestern steel sector activity fell 0.5 percent in August, after rising 0.9 percent in July, but was unchanged from August 2006. National steel output rose 0.5 percent last month, and was up 1.2 percent from the same time a year ago.
According to the Chicago Fed, resource sector output edged 0.1 percent lower in August, following a 0.6 percent rise in July. National resource sector output increased 0.1 percent in August, and was 0.9 percent above August 2006 readings. On a regional basis, resource output was 2.4 percent above year-ago levels.
''Two of the five subsectors of the resource sector — food and wood — decreased in August from July, while nonmetallic minerals production and chemicals increased, and paper was unchanged,'' the Chicago Fed said in Thursday's news release.
The only one of the index's four sectors to post an increase in the Midwest was the auto sector, which rose 0.1 percent, from a 0.5 percent decline in July. National auto production fell 0.1 percent in August, but was 2.6 percent above year-ago figures. Auto output in the Midwest was 0.7 percent below its August 2006 reading.
The Chicago Fed is scheduled to release its September index on Oct. 29.