U.S. manufacturing production in July fell 0.1% to 95.4% of its 2007 average, the Federal Reserve reported today. The dip came after a 0.2% gain in May and another 0.2% rise in June.
Industrial production overall was unchanged at 98.9, with mining advancing 2.1% and utilities falling 2.1%. Analysts had predicted a 0.3% rise in industrial production in July.
The new figures for manufacturing curbed enthusiasm generated by the August 1 Institute for Supply Management purchasing managers’ index for manufacturing, which had jumped to 55.4 and pointed to a surge in growth in the second half of 2013.
“While much of the conversation in the past couple weeks has been about improvements in production data in the summer months, it is clear that we are still not where we would like to be with this data,” said Chad Moutray, chief economist for the National Association of Manufacturing, writing on its Shopfloor blog. “Over the course of the past 12 months, industrial production has risen just 1.4%, a deceleration from the 2.0% pace suggested in the last report.”
A sluggish manufacturing environment also was reflected in the July capacity utilization figures, which edged down 0.1% to 77.6% for industry as a whole and also fell 0.1% for manufacturing, to 75.8%. Compared to July 2012, capacity utilization in manufacturing has improved 1.5%.
“The decline in production was widespread last month,” noted Daniel Meckstroth, chief economist for the Manufacturers Alliance for Productivity and Innovation (MAPI). “Of the 20 major manufacturing industries 13 declined (led by motor vehicles and parts, machinery, and printing and support), only 6 posted growth (led by primary metals and petroleum and coal products), and furniture and related products production was flat.”
“We believe that the small decline manufacturing production in July is a rebalancing from the growth in May and June” Meckstroth added. “In an economy that is growing at stall speed, this growth and decline pattern should be expected. Nevertheless, the fundamentals are improving and we predict that growth will accelerate during the remainder of this year and continue at a moderate pace in 2014.”