WASHINGTON (Reuters) - Production at U.S. factories fell in July amid a decline in motor vehicle output and disruptions from Hurricane Beryl.

Factory output dropped 0.3% last month, the Federal Reserve said on Thursday. Data for June was revised lower to show production unchanged instead of rising 0.4% as previously reported. Economists polled by Reuters had forecast factory output falling 0.2%.

Production at factories edged up 0.1% on a year-on-year basis in July. Manufacturing, which accounts for 10.3% of the economy, continues to be constrained by higher borrowing costs.

Motor vehicle and parts output dropped 7.8% last month after rising 0.3% in June. The Fed said auto production held down manufacturing output by 0.6%, while Hurricane Beryl was estimated to have weighed it down by 0.3%.

Durable manufacturing production fell 0.9% as the decline in motor vehicles more than offset gains in computer and electronic products, machinery and primary metals.

Nondurable manufacturing output gained 0.4%, boosted by petroleum and coal products as well as paper.

Mining output was unchanged after falling 0.1% in June. Early shutdowns in the petrochemical and related industries ahead of Hurricane Beryl impacted production.

Utilities production fell 3.7%. That followed a 2.6% increase in the prior month. Overall industrial production fell 0.6% in July after rising 0.3% in June.

Capacity utilization for the industrial sector, a measure of how fully firms are using their resources, dropped to 77.8% from 78.4% in June. It is 1.9 percentage point below its 1972–2023 average. The operating rate for the manufacturing sector slipped to 77.2% from 77.5% in the prior month. It is 1.1 percentage point below its long-run average.