US Industrial Production: manufacturing output held back by motor vehicles - Wells Fargo

Analysts from Wells Fargo, explained that industrial production increased 0.2% in July as gains in utility and mining production offset a decline in manufacturing production; ex-autos, manufacturing production was up 0.2%. 

Key Quotes:

“Industrial production increased 0.2 percent in July, which was a shade weaker than expectations. In an unusual development, the report hit the wire about 17 minutes before the scheduled release time. The bad news in the report is that manufacturing output, which comprises more than three quarters of overall output, slipped 0.1 percent on the month. Emblematic of the slow-growth expansion in the factory sector, manufacturing production has been up one month and down the next since February.”

“If we look past the saw-tooth pattern in the sometimes volatile monthly figures, we see that manufacturing production is up 0.8 percent on a year-to-date basis. This is consistent with our forecast for continued modest, but steady growth in the sector more broadly.”

“There is evidence to support the argument that manufacturing output is being held back by a slump in the output of motor vehicles. Motor vehicle and parts production fell 3.6 percent in July.”

“Production increased at both the nation’s mines and utilities. Each category comprises about an 11 percent share of overall production. The gain in utilities output was 1.6 percent, while mining added 0.5 percent. Mining has been grinding higher since a broad decline in energy prices resulted in steep production cuts during most of 2015 and 2016. Since the cycle low in September 2016, mining output is up more than 10 percent, though it still is about 9 percent below the all-time high reached in December 2014.”