MercoPress. South Atlantic News Agency

US industrial production drops

US industrial production dropped during August, the first time this year according to a report released by the Federal Reserve Bank.

The seasonably adjusted 0,3% drop, following July's positive 0,4%, was mostly caused by declines in vehicle and utility output, but all major categories experienced reductions with the exception of mining and construction materials.

The index which measures the balance between industries with rising and falling output registered its second worst this year.

Wall Street analysts consider the report is "a significant signal that economic growth has completely stalled". However Treasury Secretary Paul 0'Neill said the US economy fundamentals are sound adding it was "large enough and well enough" to weather a war, if necessary, in direct reference to a possible conflict with Iraq.

Although most economists continue to forecast a resumption of solid growth, they also point out that the US economy has appeared aimless for months, adding fuel to the debate as to whether it will finally falter, resume recovery or settle for a protracted spell of sluggish growth. Outside car and home sales, speared by historically low interest rates, much of the rest of the US economy has appeared weak or in retreat.

Another unexpected index revealed this week by the Labour Department was August's Consumer Prices, that recorded a 0,3% increase, the highest since last April. After the 0,1% of June and July, most experts forecasted 0,2%. Clothing, tobacco and energy were particularly influential.

According to the report if the most volatile food and energy prices are excluded, subjacent inflation in August was 0,3%, also the highest since April. Last July the index was 0,2%.