According to the Federal Reserve’s headlines, USA industrial production index (IP) increased 0.9 percent in July 2011. Econintersect’s analysis shows industrial production is up 0.2% month-over-month – which is good news as the manufacturing surveys for June and July foretold of contraction.
To begin, IP headline data has three parts – manufacturing, mining and utilities. In the July report, manufacturing was up 0.6%, mining up 1.1% and utilities were up 2.8%. Yearly changes as shown in the table below:
The Fed explanation of the headline data:
Industrial production advanced 0.9 percent in July. Although the index was revised down in April, primarily as a result of a downward revision to the output of utilities, stronger manufacturing output led to upward revisions to production in both May and June. Manufacturing output rose 0.6 percent in July, as the index for motor vehicles and parts jumped 5.2 percent and production elsewhere moved up 0.3 percent. The output of mines advanced 1.1 percent, and the output of utilities increased 2.8 percent, as the extreme heat during the month boosted air conditioning usage. At 94.2 percent of its 2007 average, total industrial production for July was 3.7 percentage points above its year-earlier level. The capacity utilization rate for total industry climbed to 77.5 percent, a rate 2.2 percentage points above the rate from a year earlier but 2.9 percentage points below its long-run (1972–2010) average.
As Econintersect uses unadjusted data, it graphs the data YoY in monthly groups. It is difficult to tell by visual inspection whether industrial production improved this month.
But when you compare the year-over-year growth for each month, June and July YoY improvements are similar.
From this point forward, 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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