Manufacturers in August Had the Best Year-Over-Year Production Growth Since 2012

The Federal Reserve reported that manufacturing production increased 0.2 percent in August, rising for the third straight month or in four of the past five months. The sector continues to see strong growth, with manufacturing output up 3.1 percent over the past 12 months, the best year-over-year rate since June 2012. Similarly, manufacturing capacity utilization inched up from 75.7 percent in July to 75.8 percent in August, a four-month high. Overall, manufacturing remains one of the bright spots in the economy right now, with business leaders continuing to report solid gains in sales, output and employment. Manufacturers have benefited from pro-growth policies, including tax and regulatory reform, as well as pent-up demand globally.

In August, durable goods production rose 1.0 percent, but output among nondurable goods manufacturers declined 0.5 percent. Overall, the sector-by-sector breakdowns provided mixed results, with eight increases, 10 declines and one sector flat (food, beverage and tobacco products). Motor vehicles and parts production continued the seesawing of the data seen from month to month this year, off 1.4 percent in July but jumping 4.0 percent in August. Beyond autos, other sectors with increased production in August included primary metals (up 3.0 percent), machinery (up 1.1 percent), aerospace and other transportation equipment (up 0.7 percent), miscellaneous durable goods (up 0.5 percent) and textile and product mills (up 0.5 percent), among others.

In contrast, output fell for apparel and leather (down 1.8 percent), printing and support (down 1.5 percent), paper (down 1.1 percent), furniture and related products (down 1.0 percent), chemicals (down 0.7 percent), plastics and rubber products (down 0.7 percent), electrical equipment, appliances and components (down 0.5 percent), computer and electronic products (down 0.3 percent) and petroleum and coal products (down 0.2 percent).

Meanwhile, total industrial production rose 0.4 percent in August for the second consecutive month. In addition to increased manufacturing output, mining and utilities production increased 0.7 percent and 1.2 percent in August, respectively. Over the past 12 months, industrial production has risen by a very robust 4.9 percent, the fastest year-over-year pace since December 2010. Mining and utilities production has grown by 14.1 percent and 4.8 percent year-over-year, respectively. In addition, capacity utilization ticked up from 77.9 percent to 78.1 percent, just shy of the 78.2 percent reading in April, which was the best rate since February 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

Leave a Reply