According to the Federal Reserve’s headlines, USA industrial production index (IP) increased 0.2 percent in June 2011 after having edged down 0.1 percent in May. Econintersect’s analysis shows industrial production is flat – which is good news as the manufacturing surveys for June foretold of contraction.
To begin, IP has three parts – manufacturing, mining and utilities. In the June report, manufacturing was up 0.0%, mining up 0.5% and utilities were up 0.9%. Yearly changes as shown in the table below:
The Fed included the excuses for the relatively soft numbers:
Manufacturing output was unchanged in June. In the second quarter, supply chain disruptions following the earthquake in Japan curtailed the production of motor vehicles and parts and restrained output in related industries; the production index for overall manufacturing was little changed for the quarter. The output of mines rose 0.5 percent in June, while the output of utilities climbed 0.9 percent. At 93.1 percent of its 2007 average, total industrial production in June was 3.4 percent above its year-earlier level. The capacity utilization rate for total industry remained unchanged at 76.7 percent in June, a rate 2.2 percentage points above the rate from a year earlier but 3.7 percentage points below its average from 1972 to 2010.
As Econintersect uses unadjusted data, it graphs the data YoY in monthly groups. To the eye, it is difficult to tell whether industrial production improved this month.
But when you compare the year-over-year growth for each month, June and May YoY improvements are similar.
Starting in July, IP will be compared against weaker YoY data, and the 3.4% YoY improvement we are now seeing in the data could continue for the rest of the year.
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