U.S. Industrial Production Increases

Manufacturing output increases a modest 0.2% in June.

Industrial production advanced 0.5% in June after having fallen 0.2% in May, the Federal Reserve reported on July 16. For the second quarter as a whole, production dropped 3.1% (annual rate) from the first quarter.

Manufacturing output gained 0.2% in June and was boosted by a jump of 5.4% in the output of motor vehicles and parts; activity resumed at motor vehicle parts and assembly plants that had been idled by a strike that began in late February and ended in late May. Excluding motor vehicles and parts, factory output edged down 0.1%.

"The June gain in manufacturing production is attributed to a 5.4% jump in motor vehicle and parts production, an unsustainable adjustment to severe inventory runoffs earlier in the year. Excluding motor vehicles and parts, manufacturing production would have declined 0.1%," said Daniel J. Meckstroth, Chief Economist for the Manufacturers Alliance/MAPI.

"Unfortunately, manufacturing continues to underperform the general economy," he added. "Second quarter GDP growth is expected to be about 2% at annual rate but todays report shows that manufacturing production fell 3.7% in the quarter. The Federal tax rebate checks may help people afford everyday items but it is not having much impact on housing, motor vehicles, industrial machinery, and other big ticket industries. It is the weak dollar that is keeping the floor under manufacturing plants in the United States."

In June, the capacity utilization rate for total industry moved up to 79.9%.

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