Industrial production measures the the output of factories, utilities, and mining, and is produced by the Federal Reserve to gauge overall economic strength.
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June marked the first increased in industrial output since November. Capacity utilization increased from 77.7 percent in June to 78.0 percent in July. Other sectors making significant increases in June included wood products (up 1.4 percent), apparel and leather (up 1.0 percent), paper (up 1.0 percent), plastics and rubber products (up 1.0 percent) and chemicals (up 0.5 percent).
The gain in output reflected a 0.8 per cent increase in factory production that was spurred by 10.6 per cent surge in motor vehicle output that more than offset a June decline.
Today’s Federal Reserve’s industrial production release showed that American manufacturing in July ended a seven-month stretch of cumulative inflation-adjusted shrinkage that represented its worst downtown since the partial recession year 2009. A bumpy global economy, the stronger US dollar and a slowdown in the oil and natural gas industry are all factors holding back manufacturing expansion.
Revisions to previous Fed manufacturing production readings were mixed but small.
Friday’s report showed mining-sector output increased 0.2 per cent in July. Economists polled by Reuters had looked for a gain of just 0.3 per cent last month. (Note that the data were also updated with a new base year, changing it from 2007=100 to 2012=100.) Capacity utilization for manufacturers increased from 75.7 percent to 76.2 percent. But the latter figure was revised down from 1.94 percent, and both numbers are by far the lowest since February 2014’s 0.85 percent (depressed by another harsh winter).
Economists had estimated that industrial production rose 0.3% month-on-month, and capacity utilization grew 78%.
But “in light of the renewed drop in crude oil prices, we foresee ongoing weakness in the sector constraining headline industrial production activity”, said Greg Daco, economist with Oxford Economics.
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A key measure of underlying producer price pressures that excludes food, energy and trade services rose 0.2 percent last month after increasing 0.3 percent in June.
