Econoday Economic Report: Industrial Production August 15, 2012

2012 Economic Calendar

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Industrial Production

Released On 8/15/2012 9:15:00 AM For Jul, 2012

	Prior	Prior Revised	Consensus	Consensus Range	Actual
Production - M/M change	0.4 %	0.1 %	0.5 %	0.3 % to 1.1 %	0.6 %
Capacity Utilization Rate - Level	78.9 %		79.2 %	79.0 % to 79.6 %	79.4 %
Manufacturing - M/M	0.7 %	0.5 %	0.5 %	0.2 % to 0.8 %	0.5 %

Highlights
Industrial production in July continued to advance. Overall industrial production jumped 0.6 percent after a 0.1 percent rise in June (originally up 0.4 percent). Expectations were for a 0.5 percent boost. While June was revised down, May was revised up to a 0.1 percent gain versus the prior estimate of a 0.2 percent decline. Revisions were offsetting.

By major components, manufacturing advanced 0.5 percent, following an increase of 0.5 percent in June (previously estimated at up 0.7 percent). Analysts forecast a 0.5 percent gain for the manufacturing component.

Motor vehicles production supported the manufacturing gain, increasing 3.3 percent in July, following a 1.9 percent rebound in June. Manufacturing excluding motor vehicles posted a 0.2 percent rise, following a 0.4 percent boost the prior month.

In July, mining output advanced 1.2 percent, following a 0.5 percent increase in June. Utilities output rebounded 1.3 percent after declining 3.3 percent the prior month.

Overall capacity utilization rose to 79.3 percent from 78.9 percent in June. The consensus projected 79.2 percent.

Manufacturing strength was in durables which increased 0.8 percent in July. Gains of more than 1 percent were recorded in primary metals, in computer and electronic products, in motor vehicles and parts, in aerospace and miscellaneous transportation equipment, and in miscellaneous manufacturing. Only wood products, nonmetallic mineral products, and machinery posted decreases. In July, the production of nondurables was unchanged.

The manufacturing sector looked good in July and June. However, today's Empire State report for August was negative. This raises questions about forward momentum although the New York State data are not always reflective of national output.

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

Market Consensus before announcement
Industrial production rebounded 0.4 percent in June, following a 0.2 percent decline in May. By major components, manufacturing gained 0.7 percent after falling 0.7 percent in May. 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. 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