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Economy in Brief

U.S. Industrial Production is Led Lower by Durable Goods
by Tom Moeller  September 15, 2014

Industrial production slipped 0.1% last month (+4.1% y/y) following a 0.2% July increase, revised from 0.4%. The decline was driven by a 0.4% shortfall (+1.3% y/y) in factory output during August after increasing 0.7%, last month reported as 1.0%. A 0.3% gain in total production was expected in the Action Economics Forecast Survey. Utility output improved 1.0% (0.0% y/y) after a 2.7% decline.

A 7.0% decline last month in automotive products production (+7.4% y/y) reversed a 7.6% July increase. Appliances, furniture & carpeting production fell 2.5% (+7.0% y/y) following strong increases in the prior five months. Working the other way was computers & electronics output. It gained 2.4% (+5.6% y/y) and reversed a 2.3% July decline. Business equipment production was unchanged (5.8% y/y) last month. A 1.0% increase (1.7% y/y) in information processing equipment was offset by a 2.3% decline (+7.2% y/y) in transit equipment (+7.2% y/y). Amongst consumer soft-goods industries, output improved 0.3% (2.0% y/y) after a 0.4% decline. Chemical production gained 0.7% (4.1% y/y) after having been unchanged and food & tobacco production gained 0.5% (1.8% y/y) following a 0.6% July decline. To the downside, clothing output fell 2.3% (+0.3% y/y), the largest of four declines in the last five months.

Within the special aggregate series, high technology industries posted a 1.5% production gain (7.4% y/y). That included a 1.6% rise (9.9% y/y) in semiconductors after having been unchanged over the prior two months. Factory production excluding the high-tech sector fell 0.5% (3.4% y/y). Manufacturing production excluding both high-tech and autos remained unchanged (3.1% y/y) following four straight months of gains between 0.2% and 0.3%.

The capacity utilization rate fell to 78.8%, its lowest level in six months. That remained below the 80.5% high averaged in 2007. In the factory sector, the capacity utilization rate declined to 77.2% and reversed the July increase. Total industry capacity rose an improving 2.8% y/y while factory sector capacity increased 2.1%.

Industrial production and capacity data are included in Haver's USECON database, with additional detail in the IP database. The expectations figure is in the AS1REPNA database.

Industrial Production (SA, % Change) Aug Jul Jun Aug Y/Y 2013 2012 2011
Total Output -0.1 0.2 0.3 4.1 2.9 3.8 3.3
Manufacturing -0.4 0.7 0.3 3.6 2.7 4.1 3.3
  Consumer Goods -0.8 0.7 -0.2 2.8 2.4 1.7 1.5
  Business Equipment 0.0 1.2 -0.3 5.8 3.6 7.5 5.6
  Construction Supplies 0.1 1.3 0.6 5.4 4.2 4.6 3.0
Materials 0.1 -0.3 0.9 4.9 3.2 4.5 4.7
Utilities 1.0 -2.7 -2.0 0.0 2.1 -2.1 -0.2
Capacity Utilization (%) 78.8 79.1 79.1 77.8 78.0 77.3 76.3
 Manufacturing 77.2 77.6 77.2 76.1 76.1 75.5 73.9
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