The nation's industrial output fell abruptly in August after six months of steady gains, the government reported yesterday - heightening the current confusion about the performance of the economy in the past several months.
New figures from the Federal Reserve Board showed production in factories, mines and utilities off a substantial 0.5 per cent over the month, following a revised 0.7 per cent increase in July. The decline was the first since the cold spell last January.
Meanwhile, the Commerce Department reported a companion slowdown in the rise in the personal income of Americans. Personal income grew a moderate 0.5 per cent in August, down from a 1 per cent boost posted in July.
The combination of figures tended to add to the uncertainty about the underlying economic picture. Government statistics have been providing conflicting signals in recent months, blurring what had been an otherwise optimistic outlook.
Carter administration officials appeared unalarmed by the decline. Both the production index and the personal income figures are based largely on monthly employment figures and last month job-growth slowed markedly.
Courtenay M. Slater, assistant Secretary of Commerce for economic affairs, predicted the output index "ought to get back to a fairly respectable figure next month" or the month after.
Slater said that, partly because inflation has slowed so much in the past two months, the economy's overall growth rate, as measured by the gross national product, may not slow as much this quarter as some anlaysts expect.
The nation's real output after adjustment for inflation, grew at a robust annual rate of 6.1 per cent between April and June. Most economists had been predicting it would slow to a 3 to 4 per cent pace this quarter before rebounding.
The decline in industrial output was widespread throughout almost every sector of the economy. Production of durable goods fell by an especially sharp 1.7 per cent. Output of business equipment plunged 0.4 per cent.
Analysts pointed out that a substantial portion of the overall drop stemmed from temporary factors, such as the impact of the iron ore industry strike in August and an interruption in auto production.
The increase in personal income in August was $8 billion, pushing that figure up to a new seasonally adjusted annual rate of $1.547 trillion. The July rise, revised was $14.9 billion, leaving that month's rate at $1.539 trillion.
Income from wages and salaries alone grew $2.2 billion to a new rate of $995.1 billion, while dividend income rose $300 million to a new annual rate of $42.4 billion. The July increases were $6.4 billion and $200 million respectively.