While industrial production increased only 0.2% in July after having advanced 0.4% in June, manufacturing fared better gaining 0.4%. This figure was boosted by a rise of 3.6% in the production of motor vehicles and parts.
Excluding motor vehicles and parts, the index for manufacturing increased 0.2%.
The modest spike of growth occurred as manufacturers adjusted production schedules after a major inventory runoff in the second quarter. Tax rebate checks have temporarily propped up consumer spending somewhat and exports remain a significant source of growth," said Daniel J. Meckstroth, Chief Economist for the Manufacturers Alliance/MAPI.
The industrial sector is having a temporary reprieve, he added. Unfortunately, housing activity continues to worsen, job losses continue, inflation is rampant, credit is more difficult to obtain, and firms remain cautious about capital investments in the United States. We think manufacturing will remain in a slow, shallow, downward trend until early 2009.
In July, the capacity utilization rate for total industry edged up to 79.9%, a level 1.1 percentage points below its average for 1972-2007.
