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Economy in Brief

U.S. Industrial Production Unexpectedly Declines in June
by Winnie Tapasanun  July 15, 2022

• IP -0.2% in June, 0.0% in May, +0.8% in April.

• Manufacturing IP declines 0.5% w/ durable goods down 0.3% and nondurable goods down 0.8%, but mining rises for the second straight month.

• Motor vehicle output falls for the second consecutive month following two straight m/m rises.

• Consumer goods output decreases while business equipment edges up.

• Capacity utilization at a three-month low; mfg. capacity utilization at a four-month low.

Total industrial production fell 0.2% m/m (+4.2% y/y) in June after holding steady in May (+0.1% previously reported on June 28 & +0.2% initially) and rising 0.8% in April (+1.3% previously reported on June 28 & +1.4% initially), according to the Federal Reserve Board. The June IP index at 104.4 was 2.7% above its pre-COVID (February 2020) level. A 0.1% m/m increase had been expected in the Action Economics Forecast Survey.

In industry groups, manufacturing production fell 0.5% (+3.6% y/y) in June following a 0.5% May decrease and three consecutive monthly gains. Durable goods declined 0.3% (+5.4% y/y) after a 1.2% slide, led by drops of 1.6% (-1.0% y/y) in primary metals, 1.5% (+12.5% y/y) in motor vehicles & parts, and 1.1% (+5.4% y/y) in machinery. Nondurable goods slid 0.8% (+1.8% y/y) after a 0.3% increase, led by drops of 2.2% (+0.9% y/y) in printing & related support activities, 1.9% (+1.5% y/y) in petroleum & coal products, and 1.8% (-2.2% y/y) in textiles & product mills. Utilities output fell 1.4% (+1.4% y/y), the first m/m fall since March, after a 1.9% gain. In contrast, mining activity rose 1.7% (8.2% y/y) after a 1.2% rise.

In market groups, consumer goods output fell 0.7% (+2.6% y/y) in June after a 0.7% May drop and four consecutive m/m increases. Construction supplies dipped 0.1% (+6.0% y/y) for both June and May. Business equipment, however, ticked up 0.1% (7.9% y/y) following a 0.5% May decline and three straight monthly advances. Materials production inched up 0.1% (3.6% y/y), the smallest of five successive m/m gains.

In special classifications, factory output of selected high-tech industries rebounded 0.2% (1.8% y/y) in June after drops of 1.4% in May and 1.9% in April. Manufacturing production excluding selected high-tech industries fell 0.6% (+3.6% y/y) after a 0.5% May drop and three consecutive monthly increases. Manufacturing production excluding both selected high-tech and motor vehicles & parts fell 0.5% (+3.0% y/y), the second straight m/m fall.

Capacity utilization declined to 80.0% in June, a three-month low, from 80.3% in May; still 0.4 percentage point above its long-run (1972–2021) average. An 80.6% rate had been expected. Manufacturing capacity utilization fell to 79.3%, the lowest since February, from 79.8%.

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.

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