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Economy in Brief

U.S. Industrial Production Unchanged in June as Utility Output Falls
by Gerald D. Cohen  July 16, 2019

Industrial production was flat during June (+1.3% year-on-year) following an unrevised 0.4% gain in May. April was revised down slightly to -0.5% from -0.4%. The Action Economics Survey forecast a 0.2% gain in June.

Manufacturing activity rose 0.4% (0.4% y/y) during June, after a 0.2% gain in May (unrevised). Utilities output dropped 3.6% (-2.6% y/y) as the number of cooling days returned to normal, after an above-normal reading in May, when utility output jumped 2.4%. Meanwhile mining activity increased 0.2% (8.7% y/y) for the second consecutive month.

The rise in manufacturing production was supported by a 0.4% increase in durables (1.4% y/y), with a 2.9% gain in motor vehicles (2.4% y/y) offsetting a 1.0% drop in machinery (+0.5% y/y). Both aerospace and computer output rose 0.9% (1.9% and 5.3% y/y respective). Nondurable output grew 0.5% (-0.5% y/y) as petroleum & coal jumped 2.5% (0.2% y/y), chemicals ticked down 0.1% (+0.9% y/y), and food increased 0.7% (-1.0% y/y).

By market group, consumer goods output was unchanged in June (-0.7% y/y), while business equipment and construction supplies both grew 0.5% (1.8% and 1.4% y/y respectively). Materials output declined 0.2% (+2.6% y/y) driven by a 0.9% drop in energy materials (+6.0% y/y).

In the special aggregate groupings, production of high technology products increased 0.7% (5.1% y/y). Semiconductor & electronic components gained 0.9% (3.2% y/y) and communications equipment grew 0.2% (14.7% y/y). Output in computer & office equipment was up 0.8% (-0.7% y/y) and stands just slightly above 2008 levels. Factory sector production excluding the motor vehicle and high tech sectors edged up 0.1% (+0.1% y/y) but is still 11% below its 2007 peak.

Capacity utilization declined to 77.9% in June from 78.1%. The Action Economics Survey expected an unchanged reading. Factory sector use rose to 75.9%, though it is down 1.4 percentage points from December's cyclical peak. Mining decreased to 91.5% well below the cycle high of 93.3% in December. Growth in capacity in the manufacturing sector continues to strengthen, up 1.2% y/y, though capacity is still slightly below its 2008 peak.

Industrial production and capacity data and US Population-Weighted Heating and Cooling Days are included in Haver's USECON database. Additional detail on production and capacity can be found in the IP database. The expectations figures come from the AS1REPNA database.

Industrial Production (SA, % Change) Jun May Apr Jun Y/Y 2018 2017 2016
Total Output 0.0 0.4 -0.5 1.3 3.9 2.3 -2.0
Manufacturing 0.4 0.2 -0.7 0.4 2.3 2.0 -0.8
    Consumer Goods 0.0 0.5 -1.7 -0.7 2.1 0.5 0.6
    Business Equipment 0.5 0.4 -1.5 1.8 3.2 3.6 -5.3
    Construction Supplies 0.5 0.6 -0.8 1.4 2.8 3.5 0.9
  Materials -0.2 0.4 0.5 2.6 5.9 2.7 -3.0
Utilities -3.6 2.4 -3.3 -2.6 4.4 -0.8 -0.4
Mining 0.2 0.2 2.6 8.7 12.4 7.4 -9.9
Capacity Utilization (%) 77.9 78.1 77.9 78.6 78.7 76.5 75.0
  Manufacturing 75.9 75.6 75.6 76.5 76.6 75.1 74.2
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