economy news bulletin news
US industrial production fell by more than analysts expected last month, the Federal Reserve said Tuesday, with a sharp contraction in output seen in consumer durables like automotive products and carpeting. bulletin news
June marked the second consecutive monthly decline, reversing some of the positive figures seen earlier this year and providing further evidence of slowing production as the Fed prepares to weigh another interest rate hike next week.
The 0.5 percent dip in industrial production was driven by a steep contraction in the index for consumer durables — like appliances, furniture and carpeting — which fell by 2.7 percent, according to the Fed.
Consumer nondurables also contracted by 0.9 percent due to decreases in clothing, energy, as well as food and tobacco production.
The monthly decline was below the median expectation of economists surveyed by MarketWatch.
The only gain last month came from defense and space equipment, which rose by 1.5 percent.
“In short, overall industrial production and manufacturing output were weaker than expected” to end the second quarter, High Frequency Economics’ chief US economist Rubeela Farooqi wrote in a note to clients.
“Weaker demand for goods and higher borrowing costs are headwinds for manufacturers,” she added.
But she said that if demand stabilizes and onshoring and infrastructure spending trends continue, it “could be positive for factory activity over coming months.”
The US central bank recently paused its campaign of interest rate hikes after 10 consecutive increases, giving policymakers more time to assess the health of the world’s biggest economy.
Despite the aggressive moves last year, inflation remains slightly above the Fed’s long-term target of two percent, the labor market remains resilient and the overall economy remains in good shape.
Although there were monthly declines in May and June, industrial production rose 0.7 percent on an annual basis in the second quarter, said the Fed.
The Fed indicated last month that it expects two additional quarter percentage-point hikes will be needed this year, and the first of which could come next Wednesday.
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economy news bulletin news
Current Release (Federal Reserve)
Release Date: July 18, 2023
Industrial production declined 0.5 percent in June for a second consecutive month but advanced 0.7 percent at an annual rate for the second quarter as a whole. Manufacturing output moved down 0.3 percent in June but rose 1.5 percent in the second quarter. In June, the indexes for mining and utilities fell 0.2 percent and 2.6 percent, respectively. At 102.2 percent of its 2017 average, total industrial production in June was 0.4 percent below its year-earlier level. Capacity utilization stepped down to 78.9 percent in June, a rate that is 0.8 percentage point below its long-run (1972–2022) average.
Market Groups
Most major market groups posted declines in June. The index for consumer durables fell 2.7 percent, led by notable decreases in the output of appliances, furniture, and carpeting (3.8 percent) and of automotive products (3.6 percent). The decrease of 0.9 percent in the index for consumer nondurables reflected declines in clothing (2.1 percent), energy (1.8 percent), and food and tobacco (1.3 percent). Within business equipment, an increase in the index for information processing was offset by decreases in the indexes for transit and for industrial and other. Defense and space equipment posted the only gain of 1.5 percent or greater among the market groups.
Industry Groups
Manufacturing output moved down 0.3 percent in June. For the second quarter, factory output moved up 1.5 percent at an annual rate, buttressed by a second-quarter jump of 36.7 percent in the production of motor vehicles and parts during the quarter. In June, the indexes for nondurable manufacturing and durable manufacturing fell 0.6 percent and 0.1 percent, respectively; the index for other manufacturing (publishing and logging) edged down 0.2 percent. Within nondurables, only chemicals recorded an increase, whereas decreases of at least 1 percent were recorded by most other industries. Notable declines occurred in the indexes for printing and support (2.5 percent) and petroleum and coal products (1.6 percent). The index for durable manufacturing, on the other hand, posted more mixed results in June, with declines in the output of motor vehicles and parts (3.0 percent) and of nonmetallic mineral products (1.2 percent) being mostly offset by gains elsewhere.
Mining output inched down 0.2 percent in June and declined 1.1 percent at an annual rate in the second quarter. Within mining, a drop of 2.8 percent in the index for oil and gas well drilling in June was nearly offset by a gain in oil and gas extraction. The output of utilities fell 2.6 percent in June and 2.0 percent in the second quarter.
Capacity utilization for manufacturing edged down to 78.0 percent in June, a rate that is 0.2 percentage point below its long-run (1972–2022) average. The operating rate for mining ticked down 0.1 percentage point to 91.6 percent, and the operating rate for utilities dropped 2.1 percentage points to 68.5 percent. The rate for mining was 5.2 percentage points above its long-run average, while the rate for utilities remained well below its long-run average.
Note. The statistics in this release cover output, capacity, and capacity utilization in the U.S. industrial sector, which is defined by the Federal Reserve to comprise manufacturing, mining, and electric and gas utilities. Mining is defined as all industries in sector 21 of the North American Industry Classification System (NAICS); electric and gas utilities are those in NAICS sectors 2211 and 2212. Manufacturing comprises NAICS manufacturing industries (sector 31-33) plus the logging industry and the newspaper, periodical, book, and directory publishing industries. Logging and publishing are classified elsewhere in NAICS (under agriculture and information, respectively), but historically they were considered to be manufacturing and were included in the industrial sector under the Standard Industrial Classification (SIC) system. In December 2002 the Federal Reserve reclassified all its industrial output data from the SIC system to NAICS.
