The 2020 Mid-Year Economic Update_long

Industrial Production Rises 0.4% in August

According to the Industrial Production and Capacity Utilization Report, manufacturing output increased 1% during the month; industrial production was still 7.3% below its pre-pandemic February level.
Industrial Production August 2020

Total industrial production rose 0.4% in August after increasing 3% in July, according to the Industrial Production and Capacity Utilization Report, released Tuesday by the Federal Reserve.

Manufacturing output continued to improve in August, rising 1%, but the gains for most manufacturing industries have gradually slowed since June. Mining production fell 2.5% in August, as Tropical Storm Marco and Hurricane Laura caused sharp but temporary drops in oil and gas extraction and well drilling.

The output of utilities moved down 0.4%. At 101.4% of its 2012 average, the level of total industrial production was 7.7% lower in August than it was a year earlier. Capacity utilization for the industrial sector increased 0.3% in August to 71.4%, a rate that is 8.4% below its long-run (1972–2019) average but 7.3% above its low in April.

Most major market groups posted increases in August, though generally by less than their average monthly gains over the previous two months. A decline in the index for consumer durables reflected a step-down in the output of automotive products, while a small decrease in the output of materials resulted primarily from a storm-induced drop in oil and gas extraction that held down energy materials. The indexes for all of the other major market groups advanced, with gains of between 1% and 2% recorded by business equipment, defense and space equipment, construction supplies, and business supplies.

Manufacturing output increased 1% in August. After falling 20.3% between February and April, factory production has rebounded; even so, in August it was still 6.7% below its February level. The index for durable manufacturing rose 0.7%, as a decline in the output of motor vehicles and parts was more than offset by broad-based increases for other durable goods industries. The index for nondurables rose 1.2%, with gains of more than 3% for apparel and leather and for plastics and rubber products. The output of other manufacturing (publishing and logging) increased 1.9%.

The index for utilities moved down 0.4% in August, with small decreases for both electric and gas utilities. Mining output fell 2.5% as a result of the drops in oil and gas drilling and extraction; coal and other types of mining posted gains.

Capacity utilization for manufacturing was 70.2% in August, 10.3% higher than its trough in April but still 8% below its long-run average. The operating rates for durable and nondurable manufacturing increased to 69.4% and 72.4%, respectively. The rate for durables was 15.5% above its April low but still 5.5% below its pre-pandemic February level; the rate for nondurables has risen 5.1% since April but was still 4% below its February level. The operating rate for mining moved down to 74.5% in August, the second-lowest level in the history of the series after the 72.6% rate recorded in May of this year.

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