Industrial Production Rises Amid July Heatwave
Vehicle and Utility Output Propel Industrial Growth
July witnessed a surge in industrial production by 1.0% in the United States, following setbacks over the past two months. The climb can be attributed to a substantial 5.2% jump in motor vehicles and parts production and an increased demand for cooling due to exceptionally high temperatures, which led to a 5.4% spike in the utilities index, a release of the Federal Reserve said on Wednesday.
Industrial Production and Capacity Utilization Overview:
• Industrial production in July stood at 102.9% of its 2017 average, slightly dipping by 0.2% from its previous year.
• Capacity utilization, a critical measure of how efficiently industries are using their resources, increased to 79.3% in July. This remains just 0.4 percentage points below the long-term average from 1972 to 2022.
Growth in Major Market Groups:
Most of the significant market groups experienced growth during July. Notably:
• The production of consumer durables saw a 4.8% rise, primarily driven by automotive products.
• The scorching weather in July prompted the indexes of energy consumer goods and energy materials to surge by 3.7% and 2.1%, respectively.
• Other areas like consumer nondurables, business equipment, as well as defense and space equipment, also saw gains of around 1%.
However, construction supplies were the outlier, marking the only decline among major market groups.
Industry Group Highlights:
Manufacturing witnessed a modest increase in output by 0.5% during July. However, it's worth noting that this index was 0.7% lower than its level a year ago. Other specifics include:
• Durable manufacturing, including sectors like motor vehicles and machinery, saw notable gains ranging from 1.0% to 5.2%.
• On the flip side, electrical equipment, primary metals, and furniture witnessed declines exceeding 1%.
• The nondurable manufacturing sector witnessed modest downturns in paper, plastics, rubber products, apparel, and leather, but these were offset by gains in other areas.
Moreover, mining output was up by 0.5% in July, marking a 2.0% rise from its year-earlier level. The utilities sector witnessed a significant 5.4% climb, heavily influenced by a 6.7% boost for electric utilities.
On the capacity utilization front:
• Manufacturing was at 77.8% in July, slightly below its long-term average.
• Mining utilization surged to 92.4%, well above its long-run average.
• Utilities, however, were at 72.3%, a number considerably below the long-term average.
Upcoming Releases for 2024:
Industry stakeholders and analysts can anticipate the G.17 release on Industrial Production and Capacity Utilization to be made available on designated dates throughout 2024, with the next release scheduled for January 17 at 9:15 a.m.
