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Economy in Brief

June Industrial Production Rebounded
by Tom Moeller July 17, 2006

Total U.S. industrial output rebounded 0.8% during June after a negligible 0.1% May gain that was upwardly revised. The rise outpaced Consensus expectations for a 0.5% increase.

Factory sector output increased 0.8% (5.7% y/y) after a 0.1% May up tick. During the second quarter manufacturing sector output rose 5.4% (AR), the same as during 1Q.

Production of durable consumer goods surged 2.2% (3.3% y/y) as output of motor vehicles & parts 3.3% (3.1%) and computers & video equipment jumped 1.1% (10.5% y/y). These gains, however, were offset by a 1.8% (-1.7% y/y) decline in appliance & furniture production. A second 0.4% (1.1% y/y) gain in nondurable consumer goods output reflected a 0.8% (8.7% y/y) rise in clothing output.

Business equipment production rose 0.7% (12.3% y/y) and more than recovered a 0.2% May decline. Production of information processing & equipment jumped another 1.3% (21.3% y/y).

Factory output less the hi-tech industries increased 0.7% (4.6% y/y). During 2Q this output measure rose 4.5% (AR) after a 4.8% gain during 1Q.

Overall capacity utilization rose to 82.4% in June, its highest level in six years. Factory sector utilization at 80.8% also is at its highest since 2000.

Diverging Measures of Capacity Utilization: An Explanation from the Federal Reserve Board can be found here.

Production & Capacity June May Y/Y 2005 2004 2003
Industrial Production 0.8% 0.1% 4.5% 3.2% 4.1% 0.6%
 Manufacturing 0.8% 0.1% 5.7% 3.9% 4.8% 0.5%
  Consumer Goods 0.8% 0.1% 1.7% 2.1% 2.1% 1.0%
  Business Equipment 0.7% -0.2% 12.3% 9.1% 9.3% 0.0%
Capacity Utilization 82.4% 81.8% 80.3% (6/05) 80.1% 78.6% 75.7%
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