Industrial production rose 1.0 percent in July after having edged down 0.1 percent in June, and manufacturing output moved up 1.1 percent in July after having fallen 0.5 percent in June. A large contributor to the jump in manufacturing output in July was an increase of nearly 10 percent in the production of motor vehicles and parts; even so, manufacturing production excluding motor vehicles and parts advanced 0.6 percent. The output of mines rose 0.9 percent, and the output of utilities increased 0.1 percent. At 93.4 percent of its 2007 average, total industrial production in July was 7.7 percent above its year-earlier level. The capacity utilization rate for total industry moved up to 74.8 percent, a rate 5.7 percentage points above the rate from a year earlier but 5.8 percentage points below its average from 1972 to 2009.
This is a great number, plain and simple. First, auto manufacturing is jumping. That indicates two things. First, demand is increasing. This is evidenced by the increase in auto sales in the latest retail sales numbers. Secondly, there have been stories about auto dealerships being under-supplied. I think the auto companies are cranking up production to increase inventories.
But we're seeing a healthy .6% increase without auto production. And according to the report, the increase was broad based.
Here are the relevant charts:
The chart above shows that all areas of production increased. In addition, notice that capacity utilization has been increasing as well on a consistent basis.
While still below the pre-recession levels, industrial production continues its upward climb.
Capacity utilization also continues to increase.
We've seen some weakness in the manufacturing numbers over the last few months. Considering the overall strength of this number I have to wonder if that trend will continue.