US Industrial Production: Slow and steady improvement - Wells Fargo

According to analysts from Wells Fargo, today’s US Industrial Production data reflected an ongoing recovery in mining activity. They see little inflationary pressure from the industrial sector.

Key Quotes: 

“The overall gain of 0.4 percent was largely a function of a 1.6 percent jump in output at the nation’s mines, reflecting the ongoing recovery in mining activity. With the contribution from mining offering some help to the tepid growth in the industrial sector rather than hindering it, the broadest measure of output is now growing at its fastest three-month annualized pace in about three years.”

“Manufacturing output, which accounts for more than three quarters of industrial production, was up 0.2 percent in June. This category has been up one month and down the next without exception since February.”

“Still, after having been roughly flat in 2015 and 2016, even this stuttering pace of growth represents a trend improvement and factors into our forecast for modest growth in equipment spending this year.”

“In separate reports yesterday and today, both PPI and CPI inflation came in a bit softer than expected. Today’s industrial production report revealed that capacity utilization edged slightly higher to 76.6 percent. That is below the 20 year average of 77.7 percent and suggests little inflationary pressure from the industrial sector.”