U.S. Industrial Production Up 0.1% in June

Manufacturing output moved down 0.4% in June after three months of gains at or near 1%.

Industrial production edged up 0.1% in June after having risen 1.3% in May, the Federal Reserve reported on July 15.

For the second quarter as a whole, total industrial production increased at an annual rate of 6.6%.

Manufacturing output moved down 0.4% in June after three months of gains at or near 1%.

The output of mines rose 0.4%. The output of utilities increased 2.7%, as temperatures moved further above seasonal norms.

"The decline in factory production was primarily concentrated in consumer-related industries such as motor vehicles, home construction materials (wood products, furniture), and food," said Daniel J. Meckstroth, Chief Economist for the Manufacturers Alliance/MAPI. "After a growth spurt earlier this year based primarily on the inventory cycle, the rest of the years activity will depend more on fundamentals. For the consumer, meager job gains and the need to repay debt are still constraints on spending growth. Fortunately, business equipment industries are rebounding at a surprisingly strong pace in light of the widespread surplus capacity in manufacturing and in the general economy.

"Firms clearly overdid the capital goods retrenchment during the recession and with improved profitability are spending more on long neglected machinery and equipment," he added. "A small decline in manufacturing activity should not be alarming given the exceptionally strong pace of growth to date. Even with the June decline in factory output, manufacturing production increased at a 7.9% annual rate, well above the 3% to 3.5% pace of growth economists estimate that occurred in the general economy in the second quarter. A deceleration in the pace of industrial production growth in the second half of this year is inevitable."

At 92.5% of its 2007 average, total industrial production in June was 8.2% above its year-earlier level. The capacity utilization rate for total industry remained unchanged in June at 74.1%, a rate 5.9 percentage points above the rate from a year earlier but 6.5 percentage points below its average from 1972 to 2009.

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