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Economy in Brief

U.S. Industrial Production Continues Rebound in July
by Sandy Batten  August 14, 2020

• Manufacturing output gains were again broad-based in July though smaller than in June.

• Even with three monthly gains, total industrial production still 8.4% below pre-Covid peak.

• Another strong gain in auto output to nearly pre-Covid level.

Industrial production increased 3.0% m/m (-8.2% y/y) in July following an upwardly revised 5.7% m/m gain in June (initially +5.4%) and a 0.9% m/m rise in May. Even with the three consecutive monthly increases, IP remains 8.4% below its pre-Covid February level. The July reading was spot on the 3.0% rise expected by the Action Economics Survey.

Manufacturing production gained 3.4% m/m (-7.7% y/y) in July after rising an upwardly revised 7.4% in June. Most major industries posted increases though they were smaller than in June. Output of durable goods rose 5.5% m/m (-9.3% y/y) following a 11.9% m/m jump in June. The rebound continued to be led by surging motor vehicle production that had been decimated by the pandemic. Motor vehicles production increased 28.3% m/m (-1.4% y/y) on top of a 118.3% rise in June and a 111.0% gain in May These three outsized monthly gains have pushed motor vehicle output up to nearly its pre-Covid February level. Apart from motor vehicle production, the rest of factory output rose 1.6% m/m in July. Output of business equipment, an indicator of capital spending, increased 5.0% m/m (-13.9% y/y) in July, its third consecutive monthly increase, but is still 11% below its pre-Covid level.

The index for nondurables rose 1.3% m/m (-5.4% y/y) in July, a slowdown from the 3.5% gain in June. The July gain was led by more than 3% m/m increases in textile and product mills, printing, and petroleum products.

After having decreased for five consecutive months, mining output edged up 0.8% m/m (-17.0% y/y) in July. The output of utilities increased 3.3% m/m (+0.6% y/y) as warmer than usual temperatures increased the demand for air conditioning.

Capacity utilization rose to 70.6% in July from a downwardly revised 68.5% in June (initially 68.6%). This slightly exceeded the Action Economics Survey which had looked for capacity utilization to increase to 70.4%. Factory sector utilization increased to 69.2% in July from an unrevised 66.9% in June.

Industrial production and capacity are located 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) Jul Jun May Jul Y/Y 2019 2018 2017
Total Output 3.0 5.7 0.9 -8.2 0.9 4.0 2.3
Manufacturing 3.4 7.4 3.8 -7.7 -0.2 2.3 2.0
   Durable Goods 5.5 11.9 6.9 -9.3 0.7 3.4 2.2
     Motor Vehicles 28.3 118.3 111.0 -1.4 -2.3 4.1 0.0
     Selected High Tech 1.6 2.1 -0.3 4.6 5.1 6.4 2.6
   Nondurable Goods 1.3 3.5 1.3 -5.4 -0.7 1.9 1.9
Utilities 3.3 2.0 -0.5 0.6 -0.8 4.4 -0.8
Mining 0.8 -0.3 -11.3 -17.0 7.1 12.4 7.4
Capacity Utilization (%) 70.6 68.5 64.8 77.4 77.8 78.7 76.5
   Manufacturing 69.2 66.9 62.3 75.3 75.6 76.6 75.1
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