U.S. industrial production dropped 0.3% in August, according to the Federal Reserve Board Report on Industrial Production.

This is the first decline since December 2001, and included a 0.1% fall in U.S. manufacturing output. Overall manufacturing output was still up 0.6% over August 2001, however.

Durable goods manufacturing, including bearings, was flat from July, but up 0.8% from August 2001.

The August decline in manufacturing was primarily sparked by automotive and light truck production cuts. The automotive production cuts are the reverse of consumer spending -- auto sales came close to setting new records in July and August, spurred by 0% financing offers and generous rebates.

Overall, the U.S. economy is still expected to continue growing at least at a 3% rate for the remainder of 2002.

Separately, the American Machine Tool Distributors Association and the Association for Manufacturing Technology reported that U.S. manufacturer demand for machine tools in 2002 has fallen dramatically from 2001.

Machine tool sales through July were only $1.29 billion, down 24% from $1.69 billion for the same period in 2001. The report is based on a survey of 200 primary metals manufacturers.

Only manufacturers in the Northeast and Central regions were buying more tooling; every other area of the country reported collapsed demand. In the Southern U.S., for example, sales were down 52% from 2001.

Some of the dropoff is cyclical, due to the every-other-year IMTS manufacturing technology show held in Chicago. Just concluded, the IMTS show causes many manufacturers to hold off machine tool purchases until they can see first hand the latest available technologies and machining solutions.

In a statement, the group said, "The summer months preceding the biennial International Manufacturing Technology Show ... typically slow as customers await the unveiling of new products and technologies."

The bearing industry, usually considered a leading (predictive) indicator of U.S. manufacturing activity, has yet to see any widespread or predictable strength from any sector other than aerospace. In addition, an expected boom in the OEM market for heavy truck bearings seems to have ended without fully materializing as expected. New emissions regulations going into effect next month had fleet buyers moving up their purchases to beat the deadline, but economic pressures have forced them to scale back again on those acquisitions.

As one bearing manufacturer told eBearing, "We've said we're waiting for second quarter, then third quarter, then fourth quarter. Now I don't know what we're waiting for; it could turn around tomorrow or next year."