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Economy in Brief

U.S. Industrial Production Has Broad-based Advance
by Carol Stone, CBE  August 17, 2021

• Factory output gains strong in durable goods, moderate in nondurable.

• Fewer auto plants have usual summer shutdown so output shows double-digit increase.

• Capacity utilization increases, remains highest since February 2020.

Industrial production rose 0.9% (6.6% y/y) in July after increasing 0.2% in June, which was revised from 0.4%. The Action Economics Forecast Survey consensus looked for 0.5% in July.

Manufacturing output advanced 1.4% (+7.4% y/y) last month following a 0.3% decline in June, which was revised from -0.1%. Motor vehicle production rebounded 11.2% (-6.9% y/y) after a 5.9% decline in June, revised from -6.6%. Shortages of semiconductors continued to limit motor vehicle production, but the July production increase reflected fewer motor vehicle plant closings then than are typical in July. Excluding the motor vehicle sector, factory output rose 0.4% (+7.4% y/y) after a 0.5% rise. In other durable goods industries, production of electrical equipment, appliance & component surged 2.3% in July (+7.7% y/y), more than reversing June's 1.8% decline. Machinery output increased 1.9% after being unchanged in June.

In the nondurable goods sector, production rose 0.3% last month (7.3% y/y) following a 0.1% decline in June; that was revised from a 0.2% increase. Chemical production rose 0.2% (9.1% y/y) after being unchanged in June. Petroleum & coal product output fell 0.6% (14.3% y/y) after June's 0.6% increase. Food, beverage & tobacco output edged upward 0.1% after June's 0.8% decline, while textile production rebounded 1.7% (+10.8% y/y) in July after a 1.0% decline. Apparel production had a second monthly decrease, 0.2% (+17.6% y/y) in July following June's -0.9%.

Utilities production decreased 2.1% (-3.8% y/y) in July, reversing June's 3.1% increase. Electric power output fell 2.7% (-4.0% y/y) while natural gas distribution rose 1.2% (-2.6% y/y. Mining output increased 1.2% (12.1% y/y) after a 0.5% rise in June.

Capacity utilization rose to 76.1% in July from 75.4% in June. July's number was again the highest since 76.3% in February 2020. The Action Economics Forecast Survey expected 75.7%. In manufacturing, utilization rebounded to 76.6% in July from 75.5% in June. Factory sector capacity rose 0.1% 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.

Industrial Production (SA, % Change) Jul Jun May Jul Y/Y 2020 2019 2018
Total Output 0.9 0.2 0.8 6.6 -7.2 -0.8 3.2
Manufacturing 1.4 -0.3 1.1 7.4 -6.6 -2.0 1.3
   Durable Goods 2.4 -0.5 1.2 7.5 -8.2 -2.1 3.1
     Motor Vehicles 11.2 -5.9 7.2 -6.9 -15.7 -3.0 4.1
     Selected High Tech 0.0 0.4 0.9 12.1 7.1 3.9 9.0
   Nondurable Goods 0.3 -0.1 1.1 7.3 -4.4 -1.8 -0.3
Utilities -2.1 3.1 -1.5 -3.8 -3.4 -0.8 4.9
Mining 1.2 0.5 1.5 12.1 -14.2 5.9 13.0
Capacity Utilization (%) 76.1 75.4 75.3 71.5 71.6 77.4 79.2
   Manufacturing 76.6 75.5 75.8 71.2 71.2 75.8 77.7
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