Econoday Economic Report: Industrial Production July 17, 2012

2012 Economic Calendar

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Industrial Production

Released On 7/17/2012 9:15:00 AM For Jun, 2012

	Prior	Prior Revised	Consensus	Consensus Range	Actual
Production - M/M change	-0.1 %	-0.2 %	0.3 %	-0.1 % to 0.5 %	0.4 %
Capacity Utilization Rate - Level	79.0 %	78.7 %	79.2 %	78.9 % to 79.4 %	78.9 %
Manufacturing - M/M	-0.4 %	-0.7 %	0.2 %	0.1 % to 0.5 %	0.7 %

Highlights
In June, industrial production made a nice comeback. Overall industrial production rebounded 0.4 percent, following a 0.2 percent decline in May (originally down 0.1 percent). Analysts forecast a 0.3 percent increase.

By major components, manufacturing gained 0.7 percent after falling 0.7 percent in May (previously estimated at down 0.4 percent). Expectations were for a 0.2 percent boost for the manufacturing component. Motor vehicles output added significantly to manufacturing, rebounding 1.9 percent in June after a 2.2 percent decline in May. Manufacturing excluding motor vehicles was quite strong also gaining 0.6 percent in June, following a 0.5 percent drop in May.

In June, mining output gained 0.7 percent, following no change the prior month. Utilities output declined 1.9 percent, following a 2.8 percent boost in May.

Overall capacity utilization improved to 78.9 percent from 78.7 percent in May. Analysts expected 79.2 percent.

The gains in manufacturing were widespread by industry. The production index for durable goods rose 0.8 percent in June after having declined 0.6 percent in May. In June, most durable goods industries exhibited gains, with the largest increases registered by machinery, which advanced 2.3 percent, and motor vehicles and parts, which rose 1.9 percent. The production of nondurables advanced 0.5 percent in June after having fallen 0.7 percent in May. Among the major components of nondurables, sizable increases were recorded in June by the indexes for textile and product mills, printing and support, petroleum and coal products, chemicals, and plastics and rubber products.

The good news is that manufacturing had a better-than-expected month in June. But the big question mark remains whether demand is slowing as reflected in softer numbers for new orders in many manufacturing surveys for June.

The traditional non-NAICS numbers for industrial production may differ marginally from the NAICS basis figures.

Market Consensus before announcement
Industrial production in May slipped 0.1 percent, following a rebound of 1.0 percent in April. By major components, manufacturing fell 0.4 percent, following a 0.7 percent jump in April. Motor vehicles output declined 1.5 percent after a 4.0 percent surge in April. Manufacturing excluding motor vehicles declined 0.3 percent after a 0.5 percent boost the prior month. In May, mining output rebounded 0.9 percent, following a 0.6 percent drop the month before. Utilities output rose 0.8 percent, following a 5.3 percent surge in April. Overall capacity utilization eased to 79.0 percent from 79.2 percent in April. Looking ahead, production worker hours gained 0.6 percent in June, suggesting a strong manufacturing component in industrial production.

Definition
The Federal Reserve's monthly index of industrial production and the related capacity indexes and capacity utilization rates cover manufacturing, mining, and electric and gas utilities. The industrial sector, together with construction, accounts for the bulk of the variation in national output over the course of the business cycle. The production index measures real output and is expressed as a percentage of real output in a base year, currently 2007. The capacity index, which is an estimate of sustainable potential output, is also expressed as a percentage of actual output in 2007. The rate of capacity utilization equals the seasonally adjusted output index expressed as a percentage of the related capacity index. Why Investors Care

The industrial sector accounts for less than 20 percent of GDP. Yet, it creates much of the cyclical variability in the economy.
Data Source: Haver Analytics

The capacity utilization rate reflects the limits to operating the nation's factories, mines and utilities. In the past, supply bottlenecks created inflationary pressures as the utilization rate hit 84 to 85 percent.
Data Source: Haver Analytics

2012 Release Schedule

Released On: 1/18 2/15 3/16 4/17 5/16 6/15 7/17 8/15 9/14 10/16 11/16 12/14

Release For: Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov

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Actual Data Source: Haver Analytics