The Chicago Federal Reserve Bank said that manufacturing activity in its district declined 0.1 percent in July. The Midwest Manufacturing Index decreased from a revised 95.9 in June to 95.8 in July. Overall, these data suggest that output in the Midwest peaked in March and has declined 0.5 percent since then. This suggests continued weaknesses in the manufacturing sector – a take that is somewhat different from some of the other regional surveys showing a rebound in July.
Taking the longer view, manufacturing output in the Midwest has risen 1.6 percent year-over-year. As we see in the national data, the sector has grown over the past 12 months, but not at a robust pace by any means.
The Midwest Manufacturing Index is heavily influenced by activity in the automotive sector. In July, output declined 0.4 percent, helping to drag the overall index lower. In general, this was a pause in an otherwise strong rally in motor vehicle output growth. Year-to-date, automotive production in the Chicago Fed’s district has increased 0.6 percent, with growth of 1.9 percent and 29.4 percent over the past year and two years, respectively.
Steel production had the strongest gains in output in July, up 1.5 percent, a figure not much different from its year-over-year pace of 1.6 percent. Machinery output was off 0.3 percent for the month, but it has risen 0.8 percent year-to-date. Meanwhile, the “resource” sector’s output was unchanged in July and up 1.3 percent over the past 12 months. Components of the resources sector, according to the Chicago Fed, include food, wood products, paper, chemicals, and nonmetallic mineral products.
Chad Moutray is the chief economist, National Association of Manufacturers.
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