Production by US factories, mines and utilities in August surpassed the level seen before the pandemic caused an unprecedented collapse, according to Federal Reserve data released Wednesday.

Industrial production increased 0.4 percent in August, but it could have been 0.3 percentage points higher had it not been for the effects of Hurricane Ida, which caused flooding and destruction in parts of Louisiana and the northeastern United States.

The monthly increase was in line with analysts' expectations and put it 0.3 percent above its level in February 2020, the last month of normalcy before the Covid-19 pandemic caused industrial output to contract sharply.

While the recovery was a "milestone," Oren Klachkin of Oxford Economics warned the sector was struggling with ongoing supply chain issues, as indicated by a nearly flat increase in motor vehicle production as the sector struggles with shortages of crucial semiconductors.

US industrial production was held down in August by the damage inflicted by Hurrican Ida, especially on oil and chemical plants in Louisiana US industrial production was held down in August by the damage inflicted by Hurrican Ida, especially on oil and chemical plants in Louisiana Photo: AFP / Patrick T. FALLON

 

"Our base case is that rising domestic and external demand keep the industrial sector on a solid growth trajectory, though gains will be capped by enduring supply chain and hiring constraint," Klachkin wrote.

Manufacturing rose 0.2 percent last month despite plant shutdowns caused by the hurricane, while mining fell 0.6 percent due to the storm disruptions to oil and gas production, the Fed report said.

Utilities climbed 3.3 percent due to demand for air conditioning with the weather still warm, according to the data.