U.S. Manufacturing Recovering at Brisk Pace

Industrial sector is benefiting from strong export growth.

Industrial production rose 0.2% in August after a downwardly revised increase of 0.6% in July, according to the Federal Reserve

Manufacturing output also rose 0.2% in August after having advanced 0.7% in July. The step-down in the rate of increase reflected a fallback in the production of motor vehicles and parts, which had jumped sharply in July, the Federal Reserve explained.

Excluding motor vehicles and parts, manufacturing output increased 0.5% in August after having gained 0.2% in July.

"Manufacturing is recovering at a brisk pace and the August industrial production report confirms relatively widespread growth among industries14 of the 20 major manufacturing industries posted growth last month, said Daniel J. Meckstroth, Chief Economist for the Manufacturers Alliance/MAPI. "The industrial sector is benefiting from strong export growth. A resurgence in repair, replacement, and cost cutting motivated machinery and equipment spending and replacement demand for big ticket consumer items like appliances and motor vehicles. Manufacturing production will decelerate its pace of growth reflecting the general weakness in the economic recovery but should continue to outpace growth in GDP this year and next."

The factory operating rate moved up to 72.2%, a rate 7 percentage points below its 1972 to 2009 average. The output of durable goods edged down 0.1%, a decline that reflected a drop in the production of motor vehicles and parts following a sharp increase in July.

The output of furniture and related products decreased 1.8% in August, but output in this category remained 2.2% above its year-earlier level. The indexes for nonmetallic mineral products and for miscellaneous manufacturing also declined. Among other durable goods industries, wood products; primary metals; fabricated metal products; and electrical equipment, appliances, and components recorded output gains of at least 1%, and the indexes for computer and electronic products and for aerospace and miscellaneous transportation equipment posted smaller increase

At 93.2% of its 2007 average, total industrial production in August was 6.2%above its year-earlier level. The capacity utilization rate for total industry rose to 74.7%, a rate 4.7 percentage points above the rate from a year earlier and 5.9 percentage points below its average from 1972 to 2009.

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