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Economy in Brief

U.S. Industrial Activity Disappoints; Factory Sector Activity Improves
by Tom Moeller  June 15, 2011

U.S. industrial production ticked up 0.1% last month after an unrevised no-change during April. The latest figure was weaker than Consensus expectations for a 0.2% gain according to Action Economics. However, weather played a big factor in the May weakness as utility output fell 2.7%. The gain in factory sector output improved to 0.4%.

Last month's overall improvement owed to a 2.6% rise (6.8% y/y) in furniture output and a 0.8% gain (6.1% y/y) in apparel. Output of high technology products similarly was strong and rose 1.3% (9.8% y/y) led by a 1.6% rise (10.8% y/y) in semiconductors and equipment. Lagging was motor vehicle output which fell 1.4% (+2.2% y/y). Less both the auto and high-tech sectors, May production rose 0.5% (3.4% y/y) after a 3.7% gain during all of last year. Amongst soft goods, apparel production rose 0.8% last month (6.1% y/y) and chemical production gained 0.3% (3.0% y/y).

Capacity utilization overall held steady at 76.7% but was up sharply versus the recession low of 67.3%. In manufacturing alone, utilization rose m/m to 74.5%, also up from the recession low of 64.4%. Notable has been the rise in the computer & electronics industries to 79.3% from a low of 68.6%. Overall, capacity rose 0.2% y/y last month after a 2.2% drop during all of 2010.

Industrial production and capacity data are included in Haver's USECON database, with additional detail in the IP database. The IP database contains figures with more decimal precision and includes extensive lists of "relative importance" numbers for several breakdowns of production by industry and market group. The expectations figure is in the AS1REPNA database.

Fiscal Sustainability is the title of yesterday's speech by Fed Chairman Ben S. Bernanke and it can be found here.

Industrial Production (SA, % Change) May Apr Mar May Y/Y 2010 2009 2008
Total Output 0.1 0.0 0.5 3.4 5.3 -11.2 -3.7
 Manufacturing 0.4 -0.6 0.6 3.6 5.4 -13.5 -5.0
   Consumer Goods -0.1 0.0 0.3 1.6 4.3 -7.2 -5.2
   Business Equipment 1.3 -0.3 -0.3 9.3 7.7 -16.3 -2.5
   Construction Supplies 1.3 0.1 1.2 4.1 3.8 -22.5 -9.7
 Materials 0.0 -0.1 1.0 4.0 6.3 -11.6 -2.7
 Utilities -2.7 2.4 -0.4 -0.3 4.0 -2.6 -0.1
Capacity Utilization (%) 76.7 76.7 76.8 74.3 74.5 69.1 77.8
 Manufacturing 74.5 74.2 74.7 71.7 71.7 66.2 74.9
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