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 8/15/08 For Jul 2008 | |||||||||||||||||||||||||
| |||||||||||||||||||||||||
Highlights
Industrial production in July posted a modest gain, led largely by a sizable gain in motor vehicles. Manufacturing outside of autos was slightly positive net. Overall industrial production advanced 0.2 percent in July, following a 0.4 percent gain in June. The July increase was above the consensus expectation for no change. The manufacturing component jumped 0.4 percent, after edging up 0.1 percent in June. Utilities output fell 1.9 percent in July while mining output rose 0.9 percent.
Within manufacturing, gains were widespread but notable strength was in motor vehicles which increased 3.6 percent. Manufacturing excluding motor vehicles rebounded 0.2 percent after a 0.2 percent dip in June. Market group data indicated that housing is still depressing certain industries with declines seen in appliances, furniture, and carpeting, among others. Consumer goods were up 0.3 percent in the latest month while business equipment posted a 0.8 percent boost. Business equipment was lifted by motor vehicles and aircraft.
On a year-on-year basis, industrial production in July dropped to down 0.1 percent from up 0.2 percent in June.
Overall capacity utilization in July nudged up to 79.9 percent from 79.8 percent in June and compared to the market forecast for 79.8 percent for July.
Today's report is modestly favorable for the economy-joining the parade with a modest rebound earlier in the day reported for the Empire State manufacturing index. But the big news today is the rise in the dollar which is pummeling commodities. The dollar's gain is based on widespread news of weakening growth in Europe.
The traditional non-NAICS numbers for industrial production may differ marginally from the NAICS basis figures.
Industrial production posted a strong gain in June but most of the strength was outside of manufacturing. Overall industrial production rebounded 0.5 percent following a 0.2 percent decline in May. However, the manufacturing component made a 0.2 percent comeback after slipping 0.1 percent in May. Utilities output increased 2.1 percent in June while mining output rose 1.1 percent. Manufacturing's strength in June is not likely to repeat in July. Strength was led by a monthly 5.4 percent jump in motor vehicle output which followed a 0.6 percent rise in May. Excluding motor vehicles, manufacturing output slipped 0.1 percent -- the same as in the prior month. With the recent weakening in auto sales, we are likely to see manufacturing weaken despite ongoing support from exports. Overall capacity utilization in June rose to 79.9 percent from 79.6 percent in May.
Industrial production Consensus Forecast for July: 0.0 percent
Range: -0.3 to +0.2 percent
Capacity utilization Consensus Forecast for July 08: 79.8 percent
Range: 79.5 to 80.0 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. |
| 2008 Release Schedule | ||||||||||||||||||||||||||
|
powered by
![[Econoday]](../../../../../../../../../images/logo.gif){kind=logo}