Industrial production dropped 1.2% in August, while capacity use decreased to 78.2%, the Federal Reserve reported Friday.
Economists polled by Thomson Reuters expected production to rise 0.1% and predicted a 79.3% capacity use rate.
In July production rose 0.5%, originally reported as a 0.6% increase, while capacity use was adjusted down to 79.2% from 79.3%.
The Fed said Hurricane Isaac blew an estimated 0.3 percentage points off production.
Manufacturing output fell 0.7% in August after a 0.4% climb in July. On a year over year basis, manufacturing production rose 3.8%.
Mining dropped 1.8% following a 1.0% increase in July, while utilities sank 3.6% after a 1.3% gain in July.