The Federal Reserve reported that industrial production was up 0.2 percent in June, reversing two months of declines. Manufacturing production was unchanged from May, with a year-over-year increase of 3.7 percent. Excluding motor vehicles and parts, manufacturing production would have risen 0.2 percent. Manufacturers’ capacity utilization figures were also unchanged.
In June, the production of nondurable goods was up 0.1 percent, while durables were flat. Over the past year, however, durable goods production (up 6.8 percent) has outstripped nondurables (up 1.4 percent). The largest monthly gainers were primary metals (up 1.6 percent), miscellaneous manufacturing (up 0.9 percent), and petroleum and coal products (up 0.8 percent). Motor vehicle and parts production was down 2.0 percent, reflecting continued supply disruptions due to the Japanese disaster earlier this year. Other decliners included furniture and related products (down 2.1 percent), wood products (down 1.2 percent), and printing and support (down 1.0 percent).
Overall, these numbers show an economy the struggled mightily in the second quarter of 2011. Other measures of manufacturing activity, such as the ISM purchasing managers’ index and some of the regional Federal Reserve Bank surveys, have been more upbeat on the latest statistics. This survey, while positive, finds that some of the challenges faced in March, April, and May – such as the supply-chain disruptions stemming from the Japanese disaster – persist. Indeed, ten of the major manufacturing industries experienced declines in production this month, compared to nine that saw increases.
While I continue to be optimistic about the third and fourth quarters of this year, it is definitely a cautious optimism.