The 2020 Mid-Year Economic Update_long

Industrial Production Down 0.1% in August

The output of utilities rose 1 percent.

The index of industrial production edged down 0.1 percent in August, and the index for manufacturing output decreased 0.4 percent; the declines were the first for each since January.

The gains in July for both indexes were revised down. The declines in total industrial production and in manufacturing output in August reflected a decrease of 7.6 percent in the production of motor vehicles and parts, which had jumped more than 9 percent in July.

The August decline in manufacturing production should not be a cause for concernthe correction was predictable and centered on motor vehicle production, said Daniel Meckstroth, chief economist for the Manufacturers Alliance for Productivity and Innovation. Motor vehicles assemblies increased 12.9% in July with an inventory rebuilding surge and then declined 11.7% in August to get back to a more sustainable production rate. The swing in motor vehicle production reverberated throughout the supply chain. The August decline in manufacturing production, consequently, was not widespread. Among the 20 manufacturing industries, 10 experienced increased production in August, 2 were flat and 8 declined.”

Excluding motor vehicles and parts, factory output rose 0.1 percent in both July and August. The production at mines moved up 0.5 percent in August, and the output of utilities rose 1 percent.

At 104.1 percent of its 2007 average, total industrial production in August was 4.1 percent above its year-earlier level. Capacity utilization for total industry decreased 0.3 percent in August to 78.8 percent, a rate 1 percentage point above its level of a year earlier and 1.3 percentage points below its long-run (1972–2013) average.

Manufacturing production decreased 0.4 percent in August after having gained 0.7 percent in July. The factory operating rate dropped 0.4 percentage point in August to 77.2 percent, a rate 1.5 percentage points below its long-run average.

The production of durable goods declined 0.9 percent in August but was 5.6 percent higher than its year-earlier level. In August, the decrease in durables largely reflected the drop in the index for motor vehicles and parts.

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