Today’s Federal Reserve report that manufacturing production increased by 0.6 percent in August signals that a recovery may now be finally underway.
11 of the 19 major manufacturing industries increased production in August. This is a welcome sign, especially since for seven of them, this was the second consecutive monthly increase.
The August report confirms earlier regional surveys that manufacturing improved in August, and the reports so far show that conditions are improving in September as well.
By far the biggest increase in output last month was in motor vehicle production, which after surging 20.1 percent in July increased by a strong 5.5 percent in August. This increase was largely due to the Cash for Clunkers program. Still, the fact that outside of selected high tech and motor vehicles industries, manufacturing production increased for a second straight month in August is a welcome sign after a post WWII-record 16.7 percent decline in production during the prior 18 months.