Industrial Production: Another step in the right direction

The industrial production index clawed back more ground in June, increasing 5.4%. Autos led a broadening increase in manufacturing production, while the drag from mining eased as oil demand has firmed a bit.

Production revs up

• As more of the nation’s factories re-opened in June, manufacturing production grew 7.2%. Auto & parts production posted another significant bounce (up 105%), as consumers began to return to dealer lots. However, the rebound extended more broadly beyond the auto sector compared to May, with production in every major manufacturing industry up in June. 
• Nevertheless, manufacturing output is down 11% since January.

Still a Ways to Go

• Total industrial production (IP) rose a more modest 5.4%, as low oil prices continue to weigh on energy extraction. Mining, which accounts for about 15% of IP, fell 2.9%. That rate of decline, however, is smaller than May, as demand for oil and therefore prices have firmed up a bit as the economy has re-opened.
• Capacity utilization improved, but underscores the depressed levels of activity relative to the start of the year.

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