Total industrial production (IP) increased 0.4% in August (+0.5% expected) after moving up 0.8% in July. Late-month shutdowns related to Hurricane Ida held down the gain in industrial production by an estimated 0.3 percentage point (PP). Although the hurricane forced plant closures for petrochemicals, plastic resins, and petroleum refining, overall manufacturing output rose 0.2%. Mining production fell 0.6%, reflecting hurricane-induced disruptions to oil and gas extraction in the Gulf of Mexico. The output of utilities increased 3.3%, as unseasonably warm temperatures boosted demand for air conditioning. At 101.6% of its 2017 average, total IP in August was 5.9% above its year-earlier level and 0.3% above its pre-pandemic (February 2020) level.
Industry Groups
Despite an estimated drag of 0.2PP due to Hurricane Ida, manufacturing output increased 0.2% in August and was 1.0% above its pre-pandemic level (NAICS manufacturing: +0.1% MoM; +6.2% YoY). The production of durable goods edged up in August; among its industries, the largest gain was recorded by furniture and related products and the largest loss was recorded by electrical equipment, appliances, and components (wood products: -0.4%). The output of nondurable goods also edged up, with gains for food, beverage, and tobacco products, for paper (+1.1%), and for petroleum and coal products outweighing losses elsewhere, in particular for chemicals. The output of other manufacturing (publishing and logging) rose 2.4%.
Capacity
utilization (CU) for the industrial sector rose 0.2PP in August to 76.4%, a
rate that is 3.2PP below its long-run (1972–2020) average.
Manufacturing CU increased 0.1PP in August to 76.7% (NAICS manufacturing: +0.1%, to 77.0%; wood products: -0.4%; paper products: +1.0%). The operating rate for mining fell 0.4PP to 76.1%, while the operating rate for utilities rose 2.3PP to 75.6%. The rates for all three sectors remained below their long-run averages.
Capacity
at the all-industries level edged up by 0.1% MoM (+0.2% YoY) to 132.9% of 2017
output. NAICS manufacturing was unchanged (0.0% YoY) at 130.5%. Wood products: 0.0% (+0.4% YoY) at 123.1%;
paper products: +0.1% (+0.4% YoY) to
113.6%.
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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