Industrial Production and Capacity Utilization Tick Higher for July

Industrial production rose by 0.6% in July. Bloomberg had the consensus estimate at only 0.4%.

June’s reading on production was revised to a gain of a mere 0.1% from the 0.3% gain that was previously reported. Friday’s report from the Federal Reserve said:

In July, manufacturing output advanced 0.8 percent primarily because of an increase in motor vehicle assemblies. The output of motor vehicles and parts jumped 10.6 percent, and production elsewhere in manufacturing edged up 0.1 percent. The index for mining rose 0.2 percent, while the index for utilities fell 1.0 percent. At 107.5 percent of its 2012 average, total industrial production in July was 1.3 percent above its year-earlier level.

Capacity utilization for the industrial sector rose by some 0.3% in July to 78.0%. Bloomberg had a consensus estimate at 78.1%. While this capacity utilization rate is 2.1 percentage points below its long-run average, it is higher than the 77.7% from both June and May, a sign or that perhaps U.S. factories and industry finally may have seen their trough.

The Fed showed that most of the major market groups recorded gains in the month of July. The largest increase was in the output of consumer goods, with a 1.2% gain. Again, this was due to that 10.9% gain in the production of automotive products. Additional notes from the Fed’s release are as follows:

• Among the remaining categories of consumer goods, non-energy nondurables registered a small gain after decreasing in the previous two months.
• Energy products posted a loss of 1.3 percent.
• Business equipment rose 3.5 percent for transit equipment was mostly offset by a decrease of 1.5 percent for industrial and other equipment.
• Information processing equipment was little changed.
• Output of business supplies moved down 0.2 percent, and the production of construction supplies moved up a similar amount for its fourth consecutive monthly gain.
• Materials rose 0.6 percent, with increases of 1.6 percent and 0.4 percent for durable and nondurable materials, respectively, and a decrease of 0.4 percent for energy materials.

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