Fed report: U.S. industrial production improved 1.0% in July

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. This is according to a report released August 17 by the Federal Reserve Bank.

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. 

r Revised. p Preliminary.

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.