U.S. Industrial Production Rebounds in July After Two Straight M/M Drops
Summary
- IP +1.0% in July, higher than expected; June revised down but May revised up.
- Mfg. IP recovers 0.5%, w/ durable goods up 0.8% and nondurable goods up 0.1%; motor vehicles production jumps 5.2% (10.3% y/y).
- Utilities output surges 5.4% (-0.9% y/y) after three consecutive m/m drops; mining activity rebounds 0.5% (2.0% y/y).
- Key categories in market groups gain except construction supplies production.
- Capacity utilization rises 0.7%-pt. to 79.3%; mfg. capacity utilization rises 0.3%-pt. to 77.8%.
Total industrial production increased 1.0% m/m (-0.2% y/y) in July after drops of 0.8% in June (-0.5% initially) and 0.4% in May (-0.5% previously), according to the Federal Reserve Board. The July IP index at 102.9 was just 0.6% below a September high, roughly moving sideways since then. A 0.3% m/m July increase had been expected in the Action Economics Forecast Survey.
By industry groups, manufacturing production rose 0.5% (-0.7% y/y) in July, the first m/m rise since April, after a downwardly revised 0.5% drop in June (-0.3% previously). Durable goods production rebounded 0.8% (0.3% y/y) following a 0.4% June decline, reflecting output gains of 5.2% (10.3% y/y) in motor vehicles & parts, 1.3% (-2.2% y/y) in machinery, 1.0% (2.4% y/y) in computer & electronic products, and 0.6% (1.1% y/y) in aerospace & miscellaneous transportation equipment. Other durable goods categories, however, fell m/m in July, reflecting output drops of 1.7% (-2.7% y/y) in electrical equipment, appliances & components, 1.2% (-8.5% y/y) in furniture & related products, 1.2% (-2.0% y/y) in primary metals, 0.7% (-5.5% y/y) in wood products, 0.6% (-0.9% y/y) in miscellaneous durables goods, 0.4% (-1.1% y/y) in fabricated metal products, and 0.2% (-1.5% y/y) in nonmetallic mineral products.
Nondurable goods production edged up 0.1% (-1.6% y/y) in July, the first m/m increase in three months, after a 0.7% decline in June, reflecting output rises of 3.1% (-4.5% y/y) in textiles & products, 1.1% (2.8% y/y) in petroleum & coal products, 0.2% (-7.1% y/y) in printing & related support activities, and 0.1% (1.4% y/y) in chemicals. In contrast, other nondurable goods categories fell m/m in July, reflecting output drops of 0.7% (-9.6% y/y) in paper, 0.4% (-6.2% y/y) in plastics & rubber products, and 0.1% (-2.7% y/y) in apparel & leather goods. Meanwhile, production in food, beverages & tobacco was virtually unchanged (-2.3% y/y) in July following two straight m/m decreases.
Utilities output jumped 5.4% (-0.9% y/y) in July as hot temperatures raised demand for cooling after a 3.0% drop in June (-2.6% previously), registering the first m/m gain since March’s 6.2%. Mining activity grew 0.5% (2.0% y/y), the first m/m increase since April, following a 0.9% June decline (-0.2% previously).
By market groups, consumer goods output rose 1.4% (0.2% y/y) in July, the first m/m rise in three months, after a 1.5% decrease in June, reflecting rises of 2.7% (0.8% y/y) in durable consumer goods and 1.0% (0.01% y/y) in nondurable consumer goods. Following two successive m/m drops, materials production rose 1.1% (0.3% y/y) and business equipment output rose 1.0% (-0.2% y/y). To the downside, construction supplies production fell 0.2% (-2.7% y/y), the fifth m/m fall in six months, after a 0.3% June decline.
In special classifications, factory output of selected high-tech industries increased 1.5% (5.9% y/y) in July, the sixth straight m/m gain, on top of a 2.1% rise in June. Following two straight m/m declines, manufacturing production excluding selected high-tech industries rose 0.4% (-0.8% y/y) and manufacturing production excluding both selected high-tech and motor vehicles & parts edged up 0.1% (-1.7% y/y).
Capacity utilization rebounded to 79.3% in July from a downwardly revised 78.6% in June (78.9% initially); 0.4 percentage point below its long-run (1972–2022) average. A 79.1% rate had been expected. Manufacturing capacity utilization rose to 77.8% in July after falling to 77.5% in June (78.0% initially).
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.
Winnie Tapasanun
AuthorMore in Author Profile »Winnie Tapasanun has been working for Haver Analytics since 2013. She has 20+ years of working in the financial services industry. As Vice President and Economic Analyst at Globicus International, Inc., a New York-based company specializing in macroeconomics and financial markets, Winnie oversaw the company’s business operations, managed financial and economic data, and wrote daily reports on macroeconomics and financial markets. Prior to working at Globicus, she was Investment Promotion Officer at the New York Office of the Thailand Board of Investment (BOI) where she wrote monthly reports on the U.S. economic outlook, wrote reports on the outlook of key U.S. industries, and assisted investors on doing business and investment in Thailand. Prior to joining the BOI, she was Adjunct Professor teaching International Political Economy/International Relations at the City College of New York. Prior to her teaching experience at the CCNY, Winnie successfully completed internships at the United Nations. Winnie holds an MA Degree from Long Island University, New York. She also did graduate studies at Columbia University in the City of New York and doctoral requirements at the Graduate Center of the City University of New York. Her areas of specialization are international political economy, macroeconomics, financial markets, political economy, international relations, and business development/business strategy. Her regional specialization includes, but not limited to, Southeast Asia and East Asia. Winnie is bilingual in English and Thai with competency in French. She loves to travel (~30 countries) to better understand each country’s unique economy, fascinating culture and people as well as the global economy as a whole.
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