Industrial Production Up 0.4% in June

In 2Q, total industrial production rose at an annual rate of 5.5%, according to the Federal Reserve's latest Industrial Production and Capacity Utilization Report.
Industrial production September 2020

Industrial production increased 0.4% in June after moving up 0.7% in May, according to the Industrial Production and Capacity Utilization Report, which was released Thursday by the Federal Reserve.

In June, manufacturing output was down 0.1%, as an ongoing shortage of semiconductors contributed to a decrease of 6.6% in the production of motor vehicles and parts. Excluding motor vehicles and parts, factory output increased 0.4%.

The output of utilities increased by 2.7%  due to the heightened demand for air conditioning as much of the U.S. experienced a heat wave in June. The index for mining gained 1.4% in June while oil and gas extraction increased 2.1%.

For the second quarter as a whole, total industrial production rose at an annual rate of 5.5%. Manufacturing output increased at an annual rate of 3.7% despite a drop of 22.5% for motor vehicles and parts.

At 100.1% of its 2017 average, total industrial production in June was 9.8% above its year-earlier level, but 1.2% below its pre-pandemic level in February of last year. Capacity utilization for the industrial sector rose 0.3 percentage point in June to 75.4% , a rate that was 4.2 percentage points below its long-run average from 1972 to 2020.

Overall, market groups posted mixed results in June. The drop in motor vehicle output contributed to decreases in consumer goods and business equipment. Defense and space equipment posted the largest gain among market groups, increasing by 4.4%. The index for materials was up 1% due to a gain in energy materials.

Manufacturing output edged down 0.1% while production of durable goods was down 0.2%. In addition to the drop for motor vehicles and parts, declines of more than 1% were recorded by nonmetallic mineral products and by electrical equipment, appliances and components.

The output of nondurable goods increased 0.2%. The largest increases were recorded by printing and support activities and by petroleum and coal products while the largest decreases were recorded by paper and by apparel and leather. The output of other manufacturing —publishing and logging — declined 0.8%.

Capacity utilization for manufacturing declined 0.1 percentage point in June to 75.3%. The operating rate for mining increased 1.1 percentage points to 76.7%, while the operating rate for utilities rose 1.8 percentage points to 74.5%. The rates for all three sectors remained below their long-run averages.

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