July 2022 Industrial Production, Capacity Utilization and Capacity

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In July, total industrial production (IP) increased 0.6% (+0.3% expected). Manufacturing output gained 0.7% after having fallen 0.4% in each of the two previous months. The production of motor vehicles and parts rose 6.6%, while factory output elsewhere moved up 0.3%. The index for mining increased 0.7%, while the index for utilities decreased 0.8%. At 104.8% of its 2017 average, total IP in July was 3.9% above its year-earlier level. 

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Industry Groups

Manufacturing output rose 0.7% in July and was 3.2% above its year-earlier level. The indexes for durable and nondurable manufacturing increased 1.3% and 0.1%, respectively, while the output of other manufacturing (publishing and logging) rose 0.4%.

Within durable manufacturing, motor vehicles and parts posted the largest gain (6.6%), but fabricated metal products, aerospace and miscellaneous transportation equipment, and miscellaneous manufacturing all recorded gains of more than 1% (wood products: +0.7%); losses of more than 1% were registered by electrical equipment, appliances, and components and by furniture and related products. Within nondurable manufacturing, gains for apparel and leather, for chemicals, and for plastics and rubber products countervailed declines for most other industries (paper: -0.6%).

Mining output rose for the third consecutive month, increasing 0.7%, and was 7.9% above its year-earlier level. The improvement in July resulted from gains in coal mining and in oil and gas well drilling and servicing. The decrease of 0.8% for utilities reflected declines for both electric utilities and natural gas utilities.

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Capacity utilization (CU) moved up 0.4 percentage point (PP) in July to 80.3%, a rate that is 0.7PP above its long-run (1972–2021) average.

Manufacturing CU increased 0.5PP in July to 79.8%, 1.6PP above its long-run average (wood products: +0.7%; paper: -0.6%). The operating rate for mining rose 0.3PP to 88.0%, 1.7PP above its long-run average. In contrast, the operating rate for utilities fell 0.8PP to 74.5% and was 10.2PP below its long-run average.

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Capacity at the all-industries level increased by 0.1% MoM (+1.3% YoY) to 130.6% of 2017 output. Manufacturing edged up by 0.1% (+0.9% YoY) to 128.9%. Wood products: +0.1% (+1.5% YoY) to 126.3%; paper: -0.1% (-0.2% YoY) to 110.2%.

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.