Industrial Production Strong On Manufacturing Strength

Strength in manufacturing leads a strong industrial production report where the July headline jumped 0.7 percent to give a big 1/2 point lift to the capacity utilization rate which is at 75.9 percent.

Manufacturing output rose 0.5 percent in the month which follows a downward revised but still very respectable 0.3 percent gain in June. Vehicle production was exceptionally strong in June and was also very solid in July though other manufacturing industries were also strong contributors to the latest month's gain. Hi-tech was strong in the month and a look at market groups shows 0.6 percent monthly gains for both consumer goods and business goods, the latter a plus given the persistent weakness in business investment.

Outside of manufacturing, utility production jumped 2.1 percent for a second straight month reflecting what has been a strong cooling season. Mining also was a positive contributor, up 0.7 percent in the month though year-on-year output here is still down in the double digits, at minus 10.2 percent.

Though these results are very positive and point to a strong factory contribution to the ongoing economy, weakness in separate data on factory orders unfortunately is not pointing to further gains ahead for manufacturing production.

Note that the traditional non-NAICS numbers for industrial production may differ marginally from the NAICS basis figures.

Recent History Of This Indicator:
Industrial production is expected to rise 0.3 percent in August and add to July's utility-inflated rise of 0.6 percent. Manufacturing is expected to show less strength, up only 0.2 percent but following a very solid 0.4 percent rise in June. Vehicle production has been making for recent swings in the manufacturing reading and may again during the retooling of July. Capacity utilization is expected to rise 1 tenth to 75.5 percent.