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Economy in Brief

U.S. Industrial Production Up in June
by Tom Moeller July 16, 2008

Industrial production recovered unexpectedly by 0.5% last month, but the gain was due mostly to warmer temperatures. The rise followed an unrevised 0.2% decline during May. Consensus expectations had been for no change in output last month.

Warmer temperatures lifted utility output by 2.1% during June and that offset the decline during May.

Factory output also was better than expected and rose 0.2% following an unrevised flat reading during May. The three-month rate change, however, remained negative at -3.1% (AR).

Production in the high tech sector again was firm and rose 1.8% (23.6% y/y). Production of computers & office equipment rose 0.8% (14.7% y/y) but the three-month growth rate slowed further to 3.7% (AR). Output of communications equipment jumped 1.6% and three-month growth totaled 18.4%.

The trend in output outside the high-tech sector has been decidedly weak. Less high-tech, factory output rose all of 0.2% last month and three-month output growth remained a negative 4.1% (AR). Output of motor vehicles & parts did rise 5.4% in June but three-month growth was still low at -4.0%. June output of furniture fell 0.4% and at an 8.1% rate during the last three months. Electrical equipment rose at a 4.2% rate during the last three months. Machinery output continued to decline sharply at a 14.7% annual rate during the last three months.

In the nondurables area, output of apparel recovered 1.3% in June but it was still down at a 3.1% rate during the last three months.

Capacity utilization increased to 79.9% from an upwardly revised 79.6% during May. Utilization in the factory sector, however, was unchanged at 77.6%, near its lowest also since late-2004.

Speculative Bubbles and Overreaction to Technological Innovation from the Federal Reserve Bank of San Francisco can be found here.

INDUSTRIAL PRODUCTION (SA) June May Y/Y 2007 2006 2005
Total 0.5 -0.2 0.3 1.7 2.2 3.3
   Manufacturing 0.2 0.0 -0.6 1.7 2.4 4.0
     Consumer Goods 0.8 -0.2 -0.8 1.7 0.3 2.8
     Business Equipment 0.2 0.2 1.6 3.3 10.4 7.3
     Construction Supplies -0.8 0.4 -6.2 -2.5 2.2 4.5
  Utilities 2.1 -2.1 4.0 3.3 -0.6 2.1
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