Manufacturing Production Rebounded Somewhat in June

The Federal Reserve reported that manufacturing production rebounded in June, up 0.2 percent, after falling in two of the three prior months. Overall, springtime production in the sector was choppier than we would have desired or expected, especially given the more robust outlook in other data sources. Yet, even with some disappointment in recent months, the longer-term trend for output among manufacturers has been quite positive. Across the past 12 months, manufacturing production has risen 1.2 percent. It was the eighth consecutive positive year-over-year reading for manufacturing output and progress from the 0.2 percent year-over-year gain in June 2016. Similarly, manufacturing capacity utilization inched up from 75.3 percent in May to 75.4 percent in June. For comparison purposes, utilization in the sector was 75.1 percent one year ago.

Durable goods production increased 0.4 percent in June, with output for nondurable goods firms flat. Twelve of the 19 major manufacturing sectors experienced growth in the latest report. The largest monthly gains included wood products (up 1.4 percent), plastics and rubber products (up 1.1 percent), motor vehicles and parts (up 0.7 percent), machinery (up 0.6 percent), primary metals (up 0.6 percent) and furniture and related products (up 0.5 percent), among others. In contrast, apparel and leather (down 1.4 percent), food, beverage and tobacco products (down 0.5 percent), petroleum and coal products (down 0.4 percent), fabricated metal products (down 0.2 percent) and textile and product mills (down 0.2 percent) were some of the sectors with reduced output in June.

Meanwhile, total industrial production jumped 0.4 percent in June, up from 0.1 percent in May and rising for the fifth straight month. In addition to the increase in output in the manufacturing sector, mining production was also higher, up 1.6 percent. Utilities production was flat. Over the past 12 months, industrial production has risen 2.0 percent, matching the pace in May, with both being the best readings since January 2015. The year-over-year pace improved from the 0.8 percent year-over-year decline in June 2016. Mining production rose 9.9 percent year-over-year, with utilities production down 2.2 percent over the past 12 months. In addition, capacity utilization increased from 76.4 percent to 76.6 percent, a reading not seen since August 2015.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM) and the Director of the Center for Manufacturing Research for The Manufacturing Institute, where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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