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Auto Production Pushes U.S. Manufacturing Output Up 1.1%

Industrial production rose .1%

After having edged down 0.1% in June, industrial production rose 1% in July, according to the Federal Reserve.

Manufacturing output moved up 1.1% in July after having fallen 0.5% in June. A large contributor to the jump in manufacturing output in July was an increase of nearly 10% in the production of motor vehicles and parts; even so, manufacturing production excluding motor vehicles and parts advanced 0.6%.

Total industrial production in July was 7.7% above its year-earlier level.

The capacity utilization rate for total industry moved up to 74.8%, a rate 5.7 percentage points above the rate from a year earlier but 5.8 percentage points below its average from 1972 to 2009.

"While signs of slowing in both the general economy and in manufacturing have become apparent in recent months, the industrial production report for July shows that the shaky U.S. economic recovery has yet to fully impede the strong factory sector rebound, said Cliff Waldman, economist for the Manufacturers Alliance/MAPI.

"Output growth in the broad business equipment category showed a gain of 1.8% powered by 1.1% growth in information processing equipment output," he added, "but consumer non-durable production activity was flat, with significant contractions in such essential industries as food and clothing. As the fiscal stimulus fades and the sizable inventory adjustment moderates, the weakness in key categories of demand, particularly consumer spending and residential investment, has made prospects for continued economic recovery especially uncertain.

"If U.S. and global economic growth slips below the pace needed for at least moderate job growth and sustainable demand then the strong factory sector recovery in the U.S. will certainly slow," he concluded, "impacting many key trading partners in North America and elsewhere whose economic prospects are, to some extent, tied to U.S. manufacturing."

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