US Factory Output Declines on Slowing Auto Production

US Factory Output Declines on Slowing Auto Production

US Factory Output Declines on Slowing Auto Production

A slump in motor vehicle production pushed down US factory output unexpectedly in July, Federal Reserve data showed Thursday.

Highlights of Industrial Production (July)

  • Factory output dropped 0.1% (est. 0.2% gainer) after 0.2% gainer
  • Total industrial production, which also includes mines and utilities, increased 0.2% (est. 0.3% rise) after a 0.4% rise
  • Manufacturing output minus motor vehicles rose 0.2%, reflecting a pickup in non-durable goods production

Key Takeaways

Automobile production fell 3.6% in July, the 4th decline in the last five months. That reflected a slowdown in sales that were a bright spot for the economy in recent years.

While factory production excluding automobiles increased, the data showed some other areas of softness. Output of business equipment and construction materials dropped for the 2nd time in 3 months.

While manufacturing is projected to continue to grow, an acceleration in the near term would require bigger gains in household demand, business investment and stronger global sales.

The monthly data, which are volatile and often get revised, contrast with other recent reports.

While the Institute for Supply Management’s factory index eased in July from the 2nd-highest mark since Y 2011, it showed steady growth in production, orders and employment.

The latest Empire State Manufacturing survey for August also posted a strong gain.

 

Recent national ISM survey data point to much improved conditions in the manufacturing sector, as do the less reliable regional indices, expect the underlying trend of reported output to gradually accelerate in the months ahead, although ongoing inventory adjustment in the automotive sector will continue to weigh.

More Details

  • Capacity utilization, measuring the amount of a plant that is in use, held at 76.7% (matching est.)
  • Utility output increased 1.6% after falling 1.2% the prior month
  • Mining production rose 0.5%; Oil and Gas well drilling decreased 0.9%
  • Production of consumer goods increased 0.2%, reflecting a 0.8% advance in the output of non-durables including chemicals and food
  • Output of business equipment fell 0.5%, while production of construction materials dropped 0.4%

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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