Industrial Production Rises 5.4% in June

According to the Industrial Production and Capacity Utilization Report, manufacturing output increased 7.2% during the month, but it was still 11.1% below its pre-pandemic February level.
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Total industrial production increased 5.4% in June, according to the Industrial Production and Capacity Utilization Report, released Wednesday by the Federal Reserve.

Even so, it remained 10.9% below its pre-pandemic February level. For the second quarter as a whole, the index fell 42.6% at an annual rate, its largest quarterly decrease since the industrial sector retrenched after World War II.

Manufacturing output climbed 7.2% in June, as all major industries posted increases. The largest gain—105%—was registered by motor vehicles and parts, while factory production elsewhere rose 3.9%.

Mining production fell 2.9%, and the output of utilities increased 4.2%. At 97.5% of its 2012 average, the level of total industrial production was 10.8% lower in June than it was a year earlier. Capacity utilization for the industrial sector increased 3.5 percentage points to 68.6% in June, a rate that is 11.2 percentage points below its long-run (1972–2019) average but 1.9 percentage points above its trough during the Great Recession.

The major market groups posted broad-based gains in June, but each still remained below its pre-pandemic level. The jump in the output of motor vehicles and parts contributed to the largest gains among the market groups: Consumer durables, business equipment, and durable materials posted increases of 36.6%, 11.8%, and 7.4%, respectively. The indexes for business supplies and for defense and space equipment each rose more than 4%. The only decline among the major market groups was posted by energy materials, held down by further reductions in oil extraction.

Manufacturing output increased 7.2% in June, but it was still 11.1% below its pre-pandemic February level; factory output fell 47% at an annual rate in the second quarter. The index for durable manufacturing rose 11.6% in June. Despite substantial gains in the past two months, the output of motor vehicles and parts remained nearly 25% below its February level. The index for nondurables rose 3.4%, with sizable gains for apparel and leather and for plastics and rubber products. The output of other manufacturing (publishing and logging) increased 2.2%.

The output of utilities rose 4.2% in June, as both gas and electric utilities posted gains. Mining output fell 2.9%, with declines in nearly all categories. The index for oil and gas well drilling fell 18% in June and was about 70% below its year-earlier level. For the second quarter, mining output declined 42.7% at an annual rate.

Capacity utilization for manufacturing in June was 66.9%, 4.6 percentage points higher than in May and 3.2 percentage points above its recession trough of June 2009. The operating rate for durable manufacturing increased 6.7 percentage points in June to 64.3%, 5.9 percentage points above its 2009 low. Capacity utilization for nondurables rose 2.4 percentage points to 70.6%, 1.8 percentage points above its 2009 low. The operating rate for mining fell to 75%, somewhat below its low in 2016 but slightly above its historical low in 1986.=

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