Total
industrial
production (IP) increased 0.4% in June (+0.7% expected)
after moving up 0.7% in May. In June, manufacturing output edged down 0.1%, as
an ongoing shortage of semiconductors contributed to a decrease of 6.6% in the
production of motor vehicles and parts. Excluding motor vehicles and parts,
factory output increased 0.4%. The output of utilities advanced 2.7%,
reflecting heightened demand for air conditioning, as much of the country
experienced a heat wave in June. The index for mining increased 1.4%. At 100.1%
of its 2017 average, total IP in June was 9.8% above its year-earlier level but
1.2% below its pre-pandemic (February 2020) level.
For 2Q as a whole, total IP rose at an annual rate of 5.5%. Manufacturing output increased at an annual rate of 3.7% despite a drop of 22.5% for motor vehicles and parts.
Industry Groups
In
June, manufacturing output edged down less than 0.1% and was 0.8% below its
pre-pandemic level (NAICS manufacturing: 0.0%, at 98.4%). Production of
durable goods slipped 0.2% (including wood
products: -0.7%); in addition to the drop for motor vehicles and parts,
declines of more than 1.0% were recorded by nonmetallic mineral products and by
electrical equipment, appliances, and components. The output of nondurable
goods rose 0.2%. The largest increases were recorded by printing and support
activities and by petroleum and coal products, while the largest decreases were
recorded by paper (-0.9%) and by apparel and leather. The output of
other manufacturing (publishing and logging) declined 0.8%.
The index for mining gained 1.4% in June and expanded at an annual rate of 25.6% in the second quarter. In June, oil and gas extraction increased 2.1%, but the index remained 6.0% below its pre-pandemic level. The index for utilities rose 2.7% in June but fell 2.2% in the second quarter.
Capacity
utilization (CU) for the industrial sector rose 0.3 percentage point (PP) in
June to 75.4%, a rate that is 4.2PP below its long-run (1972–2020) average.
Manufacturing CU declined 0.1PP in June to 75.3% (NAICS manufacturing: -0.1%, to 75.5%; wood products: -0.7%; paper products: -1.0%). The operating rate for mining increased 1.1PP to 76.7%, while the operating rate for utilities rose 1.8PP to 74.5%. The rates for all three sectors remained below their long-run averages.
Capacity
at the all-industries level was unchanged MoM (0.0% YoY) at 132.8% of 2017
output. NAICS manufacturing was also unchanged (-0.1% YoY) at 130.4%. Wood products: 0.0% (+0.4% YoY) at 123.1%;
paper products: +0.1% (+0.1% YoY) to
113.4%.
The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.
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