US Industrial Prod +0.3% in July, Capacity Utilization 81.9%
Overall industrial production rose by a m/m 0.3% in July, which compared to a median forecast of +0.3%. Earlier results for overall output were +0.6% in June, -0.2% in May, +0.6% in April, -0.1% in March, +0.8% in February (boosted by a weather-related surge in utility output), and -0.5% in January.
Manufacturing output alone was reported as up by a m/m 0.6% in July after +0.6% in June, -0.1% in May, a 0.4% rise in April, a 0.7% increase in March, a 0.1% drop in February, and a 0.6% decline in January. Our reading of the situation in the manufacturing sector is that the inventory adjustment has run its course and that activity ought to be on a better-supported trend in the months ahead, driven by modest growth in domestic demand and strong export growth. With that said, the automotive industry still has troubles, as do housing-related sectors. We therefore expect gains to be on the moderate side.
Utility output fell by a m/m 2.1% in July after a 0.1% increase in June. These followed earlier gyrations, mostly weather-related, of -1.6% in May, +2.8% in April, -6.6% in March, +8.6% in February, and +2.5% in January. Mining output rose by a m/m 0.7% in July after earlier results of +0.4% in June, +0.1% in May, 0.0% in April, +0.1% in March, -0.1% in February, and -2.3% in January.
The overall capacity utilization rate rose to 81.9% in July from a revised 81.8% in June (originally reported as 81.7%). The median forecast was for a steady rate at 81.7%. The manufacturing capacity utilization rate rose to 80.7% in July from a revised 81.4% in June (originally reported as 80.3%). The manufacturing utilization rate is well up from a cycle low of 71.6% hit in November 2001, but is still considerably below the most recent high of 83.8% reached in November 1997.