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USA Edition | Today Is Monday, September 6, 2010 |
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Whether industrial output growth proves to be temporary, or a sign of stabilization remains to be seen. But if you’re wondering down deep inside if anything is going right in the U.S. economy — the narrative materials below tell us there is. Perhaps faint, perhaps temporary — but in July 2010 U.S. industrial production grew one percent after having declined slightly in June.
Washington
U.S. Industrial Output 7.7% Above Year Ago
When the Federal Reserve Board first released its statistical summary of U.S. industrial output last week it was obscured by a flood of bad news relating to growth in unemployment, risks of a second dip recession, enveloping deflation, and open speculation about prospects for a long and painful depression. The poor jobs numbers underscored, for the political establishment, what have been significant failures by and within government to staunch the pain and restore the U.S. economy to what it was prior to the collapse of credit markets in 2008
Manufacturing, Mining, Utilities
“At 93.4 percent of its 2007 average, total industrial production in July was 7.7 percent above its year-earlier level.
The capacity utilization rate for total industry moved up to 74.8 percent, a rate 5.7 percentage points above the rate from a year earlier but 5.8 percentage points below its average from 1972 to 2009.”
Federal Reserve Board
The ongoing concerns about jobs recovery, a second downward wave in American economic activity — and the dismal prospects for the economy in the event meaningful deflation should come about — are well founded, but may prove to be too narrow in perspective for an economy as complex and resilient as ours. In part, a narrow view of U.S. economic activity tends to lean too heavily on financial sector and high technology for leadership while overlooking the important role still played by U.S. industrial output including all manufacturing, mining, and electric and gas utilities.
Non economists tend to be overwhelmed by the level and complexity of statistical information used to guide economic and monetary policy — and for good reason — for it is sometimes, at best obtuse, or simply unintelligible. Our own reading of the FED G.17 statistics published only last week convinced us that there is, at the very least, some good news about economic growth in July.
Overall Production Up 1.0%
Whether industrial output growth proves to be temporary, or a sign of stabilization remains to be seen. But if you’re wondering down deep inside if anything is going right in the U.S. economy — the narrative materials below tell us there is. Perhaps faint, perhaps temporary — but in July 2010 U.S. industrial production grew one percent after having declined slightly in June.
Industrial output growth was driven by a ten percent increase in automobile manufacturing. According to the Federal Reserve data total industrial production in July was 7.7 percent above what it was in 2009 . What the FED calls the capacity utilization rate, a measure of total industrial output, rose to 74.8 percent of the 2007 average — some 5.7 percentage points above last year’s industrial output.
8.8 Percent Growth In Automotive Products
View Original Document Including Tables
INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION
[Annual Revision Notice Below]Industrial production rose 1.0 percent in July after having edged down 0.1 percent in June, and manufacturing output moved up 1.1 percent in July after having fallen 0.5 percent in June. A large contributor to the jump in manufacturing output in July was an increase of nearly 10 percent in the production of motor vehicles and parts; even so, manufacturing production excluding motor vehicles and parts advanced 0.6 percent. The output of mines rose 0.9 percent, and the output of utilities increased 0.1 percent. At 93.4 percent of its 2007 average, total industrial production in July was 7.7 percent above its year-earlier level. The capacity utilization rate for total industry moved up to 74.8 percent, a rate 5.7 percentage points above the rate from a year earlier but 5.8 percentage points below its average from 1972 to 2009.
Market Groups
Most major market groups recorded gains in output in July, with the exception of nondurable consumer goods, which was unchanged. The production of consumer goods moved up 1.1 percent, as the output of consumer durables jumped 4.9 percent: Production for all of its major components advanced. In addition to a gain of 8.8 percent in the output of automotive products, which was mainly due to a large increase in light truck assemblies, the indexes for home electronics and for miscellaneous goods increased 1.3 and 1.5 percent, respectively; the index for appliances, furniture, and carpeting moved up 0.5 percent. Among components of consumer nondurables, the output of non-energy nondurables declined 0.2 percent, and the output of consumer energy products moved up 0.7 percent. Within non-energy nondurables, the output both of foods and tobacco and of clothing fell, while the indexes for consumer chemicals and paper products increased.
The output of business equipment rose 1.8 percent in July. Within business equipment, the production of transit equipment advanced 6.3 percent, an increase that in large part represented the gain in light truck assemblies. Elsewhere in business equipment, the index for information processing equipment rose 1.1 percent after having fallen in June. The index for industrial and other equipment increased 0.8 percent in July and now stands about 13.3 percent above its trough from a year earlier.
In July, the output of defense and space equipment moved up 1.1 percent; the increase was mostly the result of a continued rebound in military aircraft production following reductions in the output of cargo airplanes due to a strike that ended in the first half of June. The output of construction supplies rose 0.5 percent in July after having been little changed over the previous two months. The production of business supplies increased in July after having edged down in June.
The output of materials to be further processed in the industrial sector increased 0.9 percent in July, with gains for all of its major categories. The output of durable materials rose 1.3 percent; a gain in consumer parts, which primarily resulted from increases in the output of motor vehicle parts, accounted for about one-half of the overall gain in durable materials. The index for nondurable materials moved up 0.4 percent, with gains in all of its major categories. An increase in crude oil output helped push the index for energy materials up 0.9 percent.
Industry Groups
In July, manufacturing output rose 1.1 percent after having declined 0.5 percent in June. Capacity utilization for manufacturing moved up 0.8 percentage point in July to 72.2 percent, a rate 5.6 percentage points above its trough in July 2009 but 7.0 percentage points below its average from 1972 to 2009.
The production index for durable goods manufacturing jumped 2.1 percent in July. Increases were widespread among its major categories, with the largest occurring in motor vehicles and parts and in nonmetallic mineral products. In addition, fabricated metal products, machinery, computers and electronic products, aerospace and miscellaneous transportation equipment, and miscellaneous manufacturing all recorded gains of between 1.0 and 2.0 percent. The only output decreases among major durable goods industries were in wood products and in electrical equipment, appliances, and components.
The index for nondurable manufacturing increased 0.1 percent in July; higher production in most nondurable categories just slightly offset declines in food, beverage, and tobacco products; apparel; and printing and related support activities. Production in the non-NAICS manufacturing industries (logging and publishing) rose 1.5 percent.
In July, the output of utilities was little changed and maintained its recent high level, as temperatures remained unseasonably warm; operating rates at utilities in June and July, at about 82-3/4 percent, were the highest since January 2009. An increase of 0.9 percent in mining output in July was primarily the result of a gain in the extraction of crude oil. Capacity utilization in mining rose to 86.4 percent, a rate 1.0 percentage point below its average from 1972 to 2009.
Capacity utilization rates in July at industries grouped by stage of process were as follows: At the crude stage, utilization increased 0.7 percentage point to 85.1 percent, a rate 1.4 percentage points below its average for the period from 1972 to 2009; at the primary and semifinished stages, utilization rose 0.6 percentage point to 72.7 percent, a rate 8.9 percentage points below its long-run average; and at the finished stage, utilization increased 0.9 percentage point to 73.6 percent, a rate 3.9 percentage points below its long-run average.
Revision of Industrial Production and Capacity Utilization
The Federal Reserve Board released its annual revision to the index of industrial production (IP) and the related measures of capacity and capacity utilization on June 25, 2010. In this revision, the base year for the IP index was advanced from 2002 to 2007, which lowered the level of the IP index for most periods. In addition to the new base, the revised IP indexes incorporated detailed data from the 2007 Economic Census and the 2008 Annual Survey of Manufactures, both conducted by the U.S. Census Bureau. Data from selected editions of the Census Bureau’s 2008 and 2009 Current Industrial Reports have also been incorporated along with annual data from the U.S. Geological Survey regarding metallic and nonmetallic minerals (except fuels) for 2008. The revised indexes reflect updated price deflators from the Bureau of Economic Analysis. For this release, monthly indicators (either product data or input data) were revised, and the estimation methods for some series were changed. The new monthly production estimates reflect the incorporation of updated seasonal factors and monthly and quarterly source data that became available (or were revised) after the closing of the reporting window. Capacity and capacity utilization were revised to incorporate data from the Census Bureau’s Quarterly Survey of Plant Capacity for the fourth quarters of 2008 and 2009, which covered manufacturing, along with new data on capacity from the U.S. Geological Survey, the Department of Energy, and other organizations.
The published revision release is available on the Board’s website at www.federalreserve.gov/releases/G17. The revised data are also available through the website of the Department of Commerce. Further information on the revision can be obtained from the Board’s Industrial Output Section (telephone number 202-452-3197).
Note. The statistics in this release cover output, capacity, and capacity utilization in the U.S. industrial sector, which is defined by the Federal Reserve to comprise manufacturing, mining, and electric and gas utilities. Mining is defined as all industries in sector 21 of the North American Industry Classification System (NAICS); electric and gas utilities are those in NAICS sectors 2211 and 2212. Manufacturing comprises NAICS manufacturing industries (sector 31-33) plus the logging industry and the newspaper, periodical, book, and directory publishing industries. Logging and publishing are classified elsewhere in NAICS (under agriculture and information respectively), but historically they were considered to be manufacturing and were included in the industrial sector under the Standard Industrial Classification (SIC) system. In December 2002 the Federal Reserve reclassified all its industrial output data from the SIC system to NAICS.
G.17 Release Tables:
Ascii Screen reader Summary: Industrial Production and Capacity Utilization Chart Chart 1: Industrial Production, Capacity, and Capacity Utilization Chart Chart 2: Industrial Production and Capacity Utilization Chart Chart 3: Industrial Production and Capacity Utilization, High Technology Industries Ascii Screen reader Table 1: Industrial Production: Market and Industry Groups (percent change) Ascii Screen reader Table 2: Industrial Production: Special Aggregates and Selected Detail (percent change) Ascii Screen reader Table 3: Motor Vehicle Assemblies Ascii Screen reader Table 4: Industrial Production Indexes: Market and Industry Group Summary Ascii Screen reader Table 5: Industrial Production Indexes: Special Aggregates Ascii Screen reader Table 6: Diffusion Indexes of Industrial Production Ascii Screen reader Table 7: Capacity Utilization: Manufacturing, Mining, and Utilities Ascii Screen reader Table 8: Industrial Capacity: Manufacturing, Mining, and Utilities (percent change) Ascii Screen reader Table 9: Industrial Production: Gross Value of Products and Nonindustrial Supplies Ascii Screen reader Table 10: Gross-Value-Weighted Industrial Production: Stage-of-Process Groups Ascii Screen reader Table 11: Historical Statistics for IP, Capacity, and Utilization: Total Industry Ascii Screen reader Table 12: Historical Statistics for IP, Capacity, and Utilization: Manufacturing Ascii Screen reader Table 13: Historical Statistics for IP, Capacity, and Utilization: Total Industry excluding Selected High-Technology Industries Ascii Screen reader Table 14: Historical Statistics for IP, Capacity, and Utilization: Manufacturing excluding Selected High-Technology Industries
