U.S. Industrial Production Unexpectedly Declines in August
Summary
- IP -0.2% in August, +0.5% in July (revised down from +0.6%), 0.0% in June.
- Mfg. IP (only +0.1% in Aug.; downwardly revised for July and June) increases for the second consecutive month after two straight m/m drops, w/ durable goods virtually unchanged and nondurable goods up 0.2%.
- Motor vehicle output decreases 1.4%, the third m/m drop in four months, after a downwardly revised 3.2% July increase.
- Utilities output falls for the second successive month while mining activity holds steady.
- Consumer goods output declines for the third time in four months while business equipment rises for the second consecutive month.
- Capacity utilization eases 0.2%-pt. to 80.0%; mfg. capacity utilization unchanged at 79.6%.
Total industrial production fell 0.2% m/m (+3.7% y/y) in August after rising 0.5% in July (+0.6% initially) and holding steady in June, according to the Federal Reserve Board. The August IP index at 104.5 was 2.8% above its pre-COVID (February 2020) level. A 0.2% m/m increase had been expected in the Action Economics Forecast Survey.
By industry groups, manufacturing production edged up 0.1% (3.3% y/y) in August after a 0.6% increase in July (+0.7% initially) and a 0.5% decline in June (-0.4% previously). Durable goods ticked up 0.01% (4.3% y/y) after a 0.9% July gain, reflecting output rises of 2.1% (8.6% y/y) in aerospace & miscellaneous transportation equipment, 1.7% (7.9% y/y) in miscellaneous durables goods, 1.3% (0.6% y/y) in computer & electronic products, and 1.0% (3.1% y/y) in machinery. However, production for motor vehicles & parts (-1.4%; +10.2% y/y), electrical equipment & appliances (-1.0%; +2.8% y/y), fabricated metal products (-0.9%; +3.6% y/y), and primary metals (-0.4%; -0.7% y/y) posted their m/m drops in August. Production for furniture & related products fell for the sixth consecutive month in August (-2.1%; -0.5% y/y); production for wood products fell for the fourth time in five months (-1.7%; +0.8% y/y). Nondurable goods rose 0.2% (2.3% y/y) after a 0.3% July rebound, led by output gains of 3.5% (2.2% y/y) in petroleum & coal products, 0.8% (0.6% y/y) in paper, and 0.3% (3.0% y/y) in chemicals but partly offset by output drops of 1.2% (-3.3% y/y) in textiles & product mills, 0.9% (+1.4% y/y) in food, beverages & tobacco, and 0.5% (+4.2% y/y) in apparel & leather goods. Utilities output fell 2.3% (-1.6% y/y) in August after a 1.2% July decline and three straight monthly gains. Mining activity was unchanged m/m (+8.4% y/y) in August following five successive monthly rises.
By market groups, consumer goods output eased 0.2% (+2.2% y/y) in August, the third m/m decline in four months, after a 0.3% increase in July. Construction supplies dropped 0.6% (+3.6% y/y) following July’s 0.8% rebound. Materials production fell 0.4% (+3.6% y/y) vs. six consecutive m/m advances. In contrast, business equipment grew 0.7% (5.8% y/y) following a 0.5% July rise and two straight m/m declines.
In special classifications, factory output of selected high-tech industries rose 0.3% (5.8% y/y) in August, the sixth m/m rise in seven months, on top of a 0.5% gain in July. Manufacturing production excluding selected high-tech industries inched up 0.1% (3.2% y/y) after a 0.6% July increase and two successive monthly drops. Manufacturing production excluding both selected high-tech and motor vehicles & parts increased 0.2% (2.7% y/y) after a 0.4% July gain and two consecutive monthly decreases.
Capacity utilization declined to 80.0% in August from 80.2% in July; still 0.4 percentage point above its long-run (1972–2021) average. An 80.3% rate had been expected. Manufacturing capacity utilization held steady at 79.6%; 1.4 percentage points above its long-run average.
Industrial production and capacity are located 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.
Winnie Tapasanun
AuthorMore in Author Profile »Winnie Tapasanun has been working for Haver Analytics since 2013. She has 20+ years of working in the financial services industry. As Vice President and Economic Analyst at Globicus International, Inc., a New York-based company specializing in macroeconomics and financial markets, Winnie oversaw the company’s business operations, managed financial and economic data, and wrote daily reports on macroeconomics and financial markets. Prior to working at Globicus, she was Investment Promotion Officer at the New York Office of the Thailand Board of Investment (BOI) where she wrote monthly reports on the U.S. economic outlook, wrote reports on the outlook of key U.S. industries, and assisted investors on doing business and investment in Thailand. Prior to joining the BOI, she was Adjunct Professor teaching International Political Economy/International Relations at the City College of New York. Prior to her teaching experience at the CCNY, Winnie successfully completed internships at the United Nations. Winnie holds an MA Degree from Long Island University, New York. She also did graduate studies at Columbia University in the City of New York and doctoral requirements at the Graduate Center of the City University of New York. Her areas of specialization are international political economy, macroeconomics, financial markets, political economy, international relations, and business development/business strategy. Her regional specialization includes, but not limited to, Southeast Asia and East Asia. Winnie is bilingual in English and Thai with competency in French. She loves to travel (~30 countries) to better understand each country’s unique economy, fascinating culture and people as well as the global economy as a whole.
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