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Economy in Brief

U.S. Industrial Production Posted Solid Increase in August
by Sandy Batten  September 14, 2018

Industrial production increased a solid 0.4% m/m (4.8% y/y) in August and the modest 0.1% m/m rise initially reported for July was revised up to a 0.4% m/m gain. The consensus from the Action Economics Survey had looked for a 0.3% m/m gain in August. Manufacturing activity softened slightly with a 0.2% m/m rise (3.2% y/y) in August versus an unrevised 0.3% m/m gain in July. Mining output was up 0.7% m/m in August (14.2% y/y), the same monthly rise as in July. And utilities output rebounded in August, rising 1.2% m/m (4.8% y/y) following a tepid 0.1% m/m rise in July.

The rise in manufacturing output was led by a 4.0% m/m jump in the output of motor vehicles and parts after a 1.4% m/m decline in July. Motor vehicle assemblies totaled 11.5 million units at an annual rate, the strongest performance since April. More generally, manufacturing output was boosted by a 1.2% m/m (4.2% y/y) rise in the production of business equipment. Transit production (led by motor vehicles) was up 2.1% m/m and production of industrial equipment rose 1.6%. Output of oil and gas well drilling equipment slipped 0.5% m/m in August following a downwardly revised 4.2% m/m slump in July.

Consumer goods production rose 0.3% m/m (2.6% y/y) in August with output of consumer durables jumping 1.6% m/m (again led by motor vehicles) while output of nondurables was unchanged with nonenergy nondurable production off 0.2% m/m.

The production of construction supplies was unchanged in August (+3.8% y/y) after a 0.3% m/m decline in July (revised down from -0.1% m/m initially) and a 0.6% m/m drop in June. Materials output increased 0.5% m/m (7.2% y/y) with the initially reported 0.1% m/m rise for July revised up to a solid 0.6% m/m increase.

The rebound in utilities output, dictated largely by the weather, was due entirely to a 1.4% m/m jump in electric power generation. Natural gas distribution slipped 0.2% m/m but this followed a 6.9% m/m surge in July. Output of energy continued its robust performance. It rose 0.7% m/m in August, its third consecutive monthly increase with the y/y rate rising to 9.7%, its fastest annual rate of advance since 1979.

In the special aggregate groupings, production in selected high-technology industries rebounded in August, rising 0.4% m/m after a 0.2% m/m decline in July. Non-energy production excluding high-tech advanced 0.3% m/m in August, the same monthly rise as in July. Factory sector production excluding both high-tech and autos slipped 0.1% m/m in August following a solid 0.5% m/m rise in July.

Capacity utilization jumped 0.2 percentage point to 78.1% in July. This is well off the recession low of 66.7% in 2009 but still meaningfully below the pre-recession peak of 81.1% in 2007. Factory sector capacity utilization edged up to 75.8% in August from 75.7% in July.

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 2017 2016 2015
Total Output 0.4 0.4 0.6 4.8 1.6 -2.0 -1.0
Manufacturing 0.2 0.3 0.7 3.2 1.2 -0.8 -0.6
    Consumer Goods 0.3 0.4 0.7 2.6 0.0 0.7 1.5
    Business Equipment 1.2 0.4 2.2 4.2 3.2 -5.3 -2.0
    Construction Supplies 0.0 -0.3 -0.6 3.8 2.5 0.9 0.6
  Materials 0.5 0.6 0.4 7.2 2.0 -3.0 -1.5
Utilities 1.2 0.1 -1.5 4.8 -1.3 -0.4 -0.8
Mining 0.7 0.7 1.8 14.2 6.4 -9.7 -3.4
Capacity Utilization (%) 78.1 77.9 77.8 75.7 76.1 75.4 77.3
 Manufacturing 75.8 75.7 75.5 74.4 74.8 74.6 75.8
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