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Economy in Brief

U.S. Industrial Production Gains Moderately in June
by Tom Moeller  July 15, 2021

• Industrial production rise held back by chip shortage reducing auto output.

• Nondurable goods output growth slows.

• Capacity utilization highest since February 2020.

Industrial production increased 0.4% (9.8% y/y) during June after increasing 0.7% in May, revised from 0.8%. A 0.6% rise had been expected in the Action Economics Forecast Survey. Since the April 2020 low, production has risen 15.9%.

Manufacturing output eased 0.1% (+9.8% y/y) following an unrevised 0.9% May rise. Motor vehicle production declined 6.6% (+7.9% y/y) and reversed May's 7.3% increase. Shortages of semiconductors began affecting auto output in April. Excluding the motor vehicle sector, factory production rose 0.4% after a 0.5% rise. In other durable goods industries, electrical equipment, appliance & component output fell 2.2% (+8.1% y/y) after easing 0.5% in May. Machinery production slipped 0.5% (+15.7% y/y) after rising 1.0% but furniture output rose 0.6% (2.3% y/y) after rising 1.8% in May.

In the nondurable goods sector, production rose 0.2% last month (7.4% y/y) following a 0.8% rise. Chemical production rose 0.6% (8.3% y/y) after rising 2.3% while petroleum & coal product output increased 1.4% (21.2% y/y). Offsetting these gains was a 0.7% decline (+1.6% y/y) in food, beverage & tobacco output. Textile production also eased 0.1% (+16.6% y/y) after a 0.5% decline while apparel output fell 1.4% (+16.0% y/y) following a 3.1% increase.

Utilities production surged 2.7% (2.1% y/y) after a 0.8% decline. Electric power output rose 3.3% (3.1% y/y) while natural gas distribution fell 1.2% (-4.1% y/y. Mining output surged 1.4% (17.8% y/y) after a 0.8% May gain.

Capacity utilization rose to 75.4% in June from 75.1% in May. A rise to 75.7% was expected. It was the highest level since 76.3% in February 2020. In manufacturing, utilization slipped to 75.3% of capacity from 75.4% in May. Factory sector capacity eased 0.3% y/y.

Industrial production and capacity are located in Haver's USECON database. Additional detail on production and capacity utilization can be found in the IP database. The expectations figures come from the AS1REPNA database.

The Theory of Average Inflation Targeting from the Federal Reserve Bank of New York can be found here.

Industrial Production (SA, % Change) Jun May Apr Jun Y/Y 2020 2019 2018
Total Output 0.4 0.7 0.0 9.8 -7.2 -0.8 3.2
Manufacturing -0.1 0.9 -0.4 9.8 -6.6 -2.0 1.3
   Durable Goods -0.2 1.0 -1.6 12.1 -8.2 -2.1 3.1
     Motor Vehicles -6.6 7.3 -7.3 7.9 -15.7 -3.0 4.1
     Selected High Tech 0.6 1.3 1.0 16.0 7.1 3.9 9.0
   Nondurable Goods 0.2 0.8 0.9 7.4 -4.4 -1.8 -0.3
Utilities 2.7 -0.8 2.8 2.1 -3.4 -0.8 4.9
Mining 1.4 0.8 0.4 17.8 -14.2 5.9 13.0
Capacity Utilization (%) 75.4 75.1 74.6 68.7 71.6 77.4 79.2
   Manufacturing 75.3 75.4 74.7 68.2 71.2 75.8 77.7
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