The index of industrial production measures the physical output of the nation's factories, mines and utilities. The industrial sector accounts for less than one-fifth of the economy but for most of its cyclical variation. The capacity utilization rate reflects the usage of available resources among factories, utilities and mines. A high and rising operating rate may signal that resources are being utilized to their fullest capacity -- a warning sign of inflationary pressures. Why Investors Care
| Released on 8/15/07 For Jul 2007 | |||||||||||||||||||||||||
| |||||||||||||||||||||||||
Highlights
Industrial production in July was robust with weakness in utilities masking strength in the headline number. Overall industrial production advanced by 0.3 percent in July, following a 0.6 percent jump in June. The market consensus had forecast a 0.2 percent rise in overall industrial production for July. The manufacturing component posted a 0.6 percent gain in July, equaling June's surge. For July, utilities output fell 2.1 percent while mining output jumped 0.7 percent.
Overall capacity utilization edged up to 81.9 percent from 81.8 percent in June. July's level came in just above the consensus forecast for 81.8 percent capacity utilization and compares to June's initial estimate of 81.7 percent. The capacity utilization rate for manufacturing rose to 80.7 percent in July from 80.4 percent in June.
Within manufacturing, durables output increased 0.9 percent in July following a 0.8 percent boost in June. Nondurables rose 0.3 percent, following a 0.4 percent advance in June. Strength was broad-based. Industries showing greatest strength in July were motor vehicles, primary metals, machinery, computers & electronics, paper, and petroleum products. By market categories, consumer goods output rose 0.3 percent in the latest month while business equipment jumped 0.9 percent. Nonindustrial supplies fell 0.3 percent in July while materials output increased 0.4 percent.
Year-on-year, overall industrial production was up 1.4 percent in July while manufacturing was up 2.0 percent.
Today's report shows that the manufacturing sector is quite healthy. Additionally, today's Empire State report on manufacturing in August further suggests this sector is doing well. The markets may still be focusing on a good CPI report but they should be refocusing on the fact that the economy is still too strong for inflation to come down and stay down.
The traditional non-NAICS numbers for industrial production may differ marginally from the NAICS basis figures.
Industrial production posted a 0.5 percent gain in June, following a 0.1 percent dip in May. By components in June, manufacturing was up a robust 0.6 percent, utilities was up 0.3 percent, and mining output jumped 0.5 percent. Recently, manufacturing surveys have been mixed with the Empire State index strong in July while the Philly Fed index softened. Additionally, July's employment report showed that aggregate hours in manufacturing were unchanged in July - but swings in productivity can lead to output diverging from hours worked. Moderately healthy factory orders and lean inventories point to continued gains in industrial production. Overall capacity utilization in rose to 81.7 percent from 81.4 percent in May.
Industrial production Consensus Forecast for July: +0.2 percent
Range: +0.1 to +0.5 percent
Capacity utilization Consensus Forecast for July 07: 81.8 percent
Range: 81.4 to 82.0 percent
![[Chart]](chart.gif)
|
The industrial sector accounts for less than 20 percent of GDP. Yet, it creates much of the cyclical variability in the economy. |
![[Chart]](chart_1.gif)
|
The capacity utilization rate reflects the limits to operating the nation's factories, mines and utilities. In the past, supply bottlenecks created inflationary pressures as the utilization rate hit 84 to 85 percent. |
| 2007 Release Schedule | ||||||||||||||||||||||||||
|
powered by
![[Econoday]](../../../../../../../../../images/logo.gif){kind=logo}