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Economy in Brief

U.S. Industrial Production Remains Volatile
by Tom Moeller  July 17, 2018

The Federal Reserve reported that industrial production increased 0.6% (3.8% y/y) during June following a 0.5% May decline, revised from -0.1%. April's 1.1% rise was stronger than reported earlier. The June rise matched expectations in the Action Economics Forecast Survey. Factory sector production recovered 0.8% (2.0% y/y) last month after a 1.0% decline during May, revised from -0.7%. Utility output weakened 1.5% (+5.0% y/y) after a 0.7% fall. Mining production rose 1.2% (13.0% y/y) following a 2.2% strengthening.

The rebound in production reflected a 0.7% gain (2.5% y/y) in consumer goods output which partially reversed the prior month's 1.9% decline. Durable consumer goods production rose 3.8% (2.4% y/y) after a 4.3% fall. Automotive product output recovered 7.4% (3.6% y/y) and reversed virtually all of May's drop. Computer, video & related production improved 1.1% (5.7% y/y) after a 0.4% rise. Appliance, furniture & carpeting production gained 0.2% (-2.8% y/y) after the prior month's 1.3% decline.

Nondurable consumer goods production eased 0.1% (+2.6% y/y) following a 1.3% decline. Energy product output fell slightly (4.8% y/y) after a 3.6% fall. Apparel production declined 3.1% (-1.8% y/y) after a 1.4% fall. Food & tobacco production eased 0.3% (+1.8% y/y), the third decline in four months. Paper product output held steady (-0.7% y/y) after a 1.2% decrease. To the upside was chemical product production by 0.2% (3.0% y/y), the third consecutive monthly rise.

Production of business equipment improved 2.1% last month (2.3% y/y) and reversed May's 2.0% decline. Transit equipment production strengthened 5.9% (0.4% y/y) and reversed a 5.3% drop. Production of information processing equipment rose 1.3% (5.0% y/y) following a 0.7% shortfall. Industrial equipment & other equipment production gained 0.7% (2.0% y/y) after declines in four of the prior five months.

Construction supplies output weakened 0.6% (+3.2% y/y) after a 0.3% increase.

Production of materials improved 0.5% (5.4% y/y) for the second straight month. Energy materials output increased 0.4% (10.9% y/y) after three months of strong increase. Durable goods materials output rose 0.5% (2.9% y/y) following a 1.0% decline and nondurable goods materials also improved 0.5% (0.4% y/y) following a 0.6% decline.

In the special aggregate groupings, production of selected high-technology industries rose 1.4% (7.5% y/y) following stability in May. Nonenergy production excluding high-tech advanced 0.7% (1.8% y/y) after a 1.1% decline. Factory sector production excluding both high-tech and autos improved 0.2% (1.6% y/y) after a 0.4% decline.

Capacity utilization rose to 78.0%, up from its 2016 low of 75.0%. Factory sector capacity utilization improved to 75.5% from 75.0% in May. Manufacturing sector capacity increased 1.1% y/y.

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.

Semiannual Monetary Policy Report to the Congress by Federal Reserve Board Chairman Jerome H. Powell is available here.

Industrial Production (SA, % Change) Jun May Apr Jun Y/Y 2017 2016 2015
Total Output 0.6 -0.5 1.1 3.8 1.6 -2.0 -1.0
Manufacturing 0.8 -1.0 0.5 2.0 1.2 -0.8 0.1
    Consumer Goods 0.7 -1.9 1.6 2.5 0.0 0.7 1.5
    Business Equipment 2.1 -2.0 1.1 2.3 3.2 -5.3 -2.0
    Construction Supplies -0.6 0.3 0.5 3.2 2.5 0.9 0.6
  Materials 0.5 0.5 0.9 5.4 2.0 -3.0 -1.5
Utilities -1.5 -0.7 5.7 5.0 -1.3 -0.4 -0.8
Mining 1.2 2.2 0.7 13.0 6.4 -9.7 -3.4
Capacity Utilization (%) 78.0 77.7 78.2 76.2 76.1 75.4 77.3
 Manufacturing 75.5 75.0 75.8 74.8 74.8 74.6 75.8
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