Industrial production recovered in July after its June fall. However, the 0.4% gain was less than the 0.5% market forecasters had looked for, and June itself was revised lower, from a 0.3% decline to a 0.5% decline.

The hints of softness in the production data are concentrated in utilities. Mild weather yielded a 2.5% fall in utility output in June and another 2.1% in July. Production in the important factory sector rebounded 0.6% last month after a 0.2% fall in June.

Output of motor vehicles stabilized after following sizable declines in May and June. The high tech sector continued to expand with some vigor; relatively slower growth occurred in March and April, 1.3% and 1.5%, respectively, but the last three months have averaged 2.5% each. Accompanying the lower utility output, energy producers saw their output reduced by 0.6% after a 1.7% drop in June. Other industries' (excluding energy, motor vehicles and high tech) production moderated in July to a 0.3% rise from 0.4% in June. It is evident visually in the graph that US industry has become more economical in its use of energy. Over the 37-year history of the energy data, that output has increased at a 1.5% annualized rate, as total industry has expanded at a 2.7% pace, a "productivity" difference of 1.2 percentage points. However, over the last 15 years, energy output has been slower, at 1.1%, even as total industrial output has picked up to a 2.9% rate, reflecting a larger "productivity" of 1.8 percentage points.

Total capacity utilization increased to 77.1%, although the downward revision to June means that the July increase leaves utilization still below the 77.2% originally calculated for June. Growth in capacity continued at 1.3% y/y.