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Economy in Brief

Industrial Production Recovered
by Tom Moeller July 15, 2005

Industrial production in June jumped 0.9% and handily beat Consensus expectations for a 0.4% rise. The gain was inflated by warmer weather which raised utility output by 5.3%. Factory sector output rose 0.4% (3.8% y/y) following a downwardly revised 0.4% increase in May.

Output of computers & peripheral equipment jumped 1.3% (12.5% y/y) though high tech output overall rose just 0.3% (17.0% y/y). Excluding the high tech sector factory output rose 0.5% (3.1% y/y) due to a 2.9% (6.9% y/y) rise in motor vehicle output and a 0.8% (9.2% y/y) increase in aerospace. Electrical equipment fell 0.1% (+1.0% y/y) and machinery output rose 0.2% (7.0% y/y).

Total capacity utilization rose to 80.0% and capacity grew 1.1% y/y. Factory sector utilization rose to 78.4% versus 76.5% last June and capacity rose 1.3% y/y.

The Relationship Between Capacity Utilization and Inflation from the Federal Reserve Bank of Philadelphia can be found here.

Production & Capacity June May Y/Y 2004 2003 2002
Industrial Production 0.9% 0.3% 4.0% 4.1% -0.0% -0.3%
  Consumer Goods 1.2% 0.7% 4.1% 2.7% 0.3% 1.4%
  Business Equipment 0.2% 1.0% 8.2% 9.5% 1.2% -7.9%
Capacity Utilization 80.0% 79.4% 77.8% (6/04) 78.1% 75.5% 75.3%
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