U.S. Industrial Production Surprises to Upside in June
by:Sandy Batten
|in:Economy in Brief
Summary
- Total IP increased 0.6% m/m in June with upward revisions to both April and May.
- Manufacturing output rose 0.4% m/m with a marked upward revision to May.
- A 2.8% m/m in utilities production also provided a significant boost in June.
- Capacity utilization increased to 78.8%, its highest reading since last September.
Total industrial production increased 0.6% m/m (1.6% y/y) in June following an upwardly revised 0.9% m/m rise in May (previously 0.7%). The Action Economics Forecast Survey had expected a 0.3% monthly gain. Manufacturing output rose 0.4% m/m (1.1% y/y) in June after an upwardly revised 1.0% m/m increase in May (previously 0.6%). Mining activity gained 0.3% m/m (-0.6% y/y) in June following a downwardly revised 0.7% monthly decline in May (previously +0.1% m/m). Utilities output posted its third consecutive outsized monthly increase, rising 2.8% m/m (7.9% y/y) in June after monthly gains of 1.9% in May and 3.6% in April.
After having been relatively flat over the past year or so, the rises in IP over the past two months have pushed the level of output to its highest since December 2018. However, the performance of the manufacturing sector, one of the parts of the economy most adversely affected by the Fed’s aggressive interest rate hikes, has paled in comparison notwithstanding the solid increases of the past two months. Since April 2022 (just after the Fed initiated its rate hikes in March 2022), manufacturing output has fallen 0.3% even with the 1.4% increase over the past two months.
Within the manufacturing sector in June, durable goods production was unchanged (+0.2% y/y) following a 0.7% monthly gain in May. Motor vehicle production rose 1.6% m/m, while production of electrical equipment and appliances increased 1.5%. By contrast, production of fabricated metal products fell 1.3% m/m, machinery output declined 0.7% m/m, and production of miscellaneous durable goods decreased 1.7% m/m, the fourth consecutive monthly decline. Production of nondurable goods increased 0.8% m/m in June on top of a 1.4% monthly gain in May.
Production of selected high-technology industries edged up 0.2% m/m in June following monthly gains of 2.0% in May and 1.0% in April. Energy production increased 1.4% in June, its third consecutive monthly gain. Manufacturing output excluding motor vehicles increased 0.3% m/m, down from a 1.1% monthly increase in May. Manufacturing output excluding selected high-tech industries and motor vehicles also rose 0.3% m/m in June after a 1.1% monthly increase in May.
Production of construction supplies slipped 0.1% m/m (-0.4% y/y) in June, its third monthly decline in the past four months. Materials output rose 0.7% m/m (1.5% y/y) in June after a 1.1% monthly rise in May.
Total capacity utilization rose to 78.8% in June, its highest reading since last September, from 78.3% in May (revised up slightly from 78.2% previously). The Action Economics Forecast Survey had forecasted 78.4%. The capacity utilization rate for manufacturing increased to 77.9% in June from an upwardly revised 77.6% in May (previously 77.3%).
Industrial production and capacity data are in Haver’s USECON database. Additional detail on production and capacity utilization can be found in the IP database. The expectations figures come from the AS1REPNA database.
Sandy Batten
AuthorMore in Author Profile »Sandy Batten has more than 30 years of experience analyzing industrial economies and financial markets and a wide range of experience across the financial services sector, government, and academia. Before joining Haver Analytics, Sandy was a Vice President and Senior Economist at Citibank; Senior Credit Market Analyst at CDC Investment Management, Managing Director at Bear Stearns, and Executive Director at JPMorgan. In 2008, Sandy was named the most accurate US forecaster by the National Association for Business Economics. He is a member of the New York Forecasters Club, NABE, and the American Economic Association. Prior to his time in the financial services sector, Sandy was a Research Officer at the Federal Reserve Bank of St. Louis, Senior Staff Economist on the President’s Council of Economic Advisors, Deputy Assistant Secretary for Economic Policy at the US Treasury, and Economist at the International Monetary Fund. Sandy has taught economics at St. Louis University, Denison University, and Muskingun College. He has published numerous peer-reviewed articles in a wide range of academic publications. He has a B.A. in economics from the University of Richmond and a M.A. and Ph.D. in economics from The Ohio State University.
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