In August, US factory production barely rose as the output of motor vehicles dropped. Looking forward, analysts note that it could plunge even further as the United Auto Workers (UAW) begins a strike at three factories over contract negotiation disputes on Friday.

Last month manufacturing output inched up 0.1%, according to the Federal Reserve on Friday. July’s data was revised down slightly to indicate factory production rebounded 0.4% instead of 0.5% as had been reported previously. A Reuters poll of economists forecasted factory output rising 0.1%.

On a year over year basis, production was down 0.6% for August.

Motor vehicle and parts output was down 5.0% last month after gaining 5.1% in July, when difficulties in adjusting the data for seasonal fluctuations related to annual plant retooling shutdowns benefitted it.

On Friday, the UAW union began simultaneous strikes at three different factories owned by General Motors, Ford, and Stellantis which analysts note could undercut manufacturing activity going forward.

Accounting for 11.1% of the economy, manufacturing was already suffering due to higher interest rates diminishing the demand for goods. The Federal reserve has hiked interest rates by 5.25% since March of 2022, raising its key rate to the current range of 5.25%-5.50%.

However some analysts point to signs that manufacturing might be beginning to stabilize. Although the Institute for Supply Management’s reading of national factory activity contracted for a tenth consecutive month in August, the rate of contraction slowed.

Factory output excluding motor vehicles increased 0.6% for August, after holding steady in July. Primary metals, machinery, aerospace and miscellaneous transportation equipment, as well as furniture and related products all registered increases in output. However wood products production as well as nonmetallic mineral products, fabricated metal products, and electrical equipment, appliances and components, all showed declines.

Mining output was up 1.4% following a 0.2% decline in July. Utilities production increased 0.9% after a 4.4% surge in July when demand for air conditioning was boosted by a heatwave across much of the southern half of the country.

Overall, industrial production was up 0.4% for August after increasing 0.7% in July. A measure of how fully companies are using their resources, capacity utilization, increased to 79.9% for August, up from 79.5% in July. That is roughly in line with the average for 1972-2022.

The manufacturing sector’s operating rate was unchanged at 77.9% for August, which is 0.3% under its long-run average.