Industrial Production and Capacity Utilization Bounce Back

Industrial production rose twice as fast as expected in April, at +.7% MoM (consensus +.3%). This follows a revision lower to -.3% MoM from -.2% in March. High tech and motor vehicle demand helped support the rise in industrial production in April. Lower than normal temps in April helped utility output rise 3.5% MoM. Industrial production is now up +1.9% YoY.

All major market sectors showed growth in April. Consumer goods rebounded to offset the loss of the prior month. Business equipment demand grew +.9% MoM, the third straight rise. Construction supply output grew +.4% MoM. Manufacturing output rose +.5% MoM, on a gain in durables production, and accounts for about 80% of total industrial production.

Capacity utilization rebounded strongly to 81.6% (consensus 81.5%) from a revised lower 81.2% in March. The 1972-2006 average for capacity utilization is 81. Capacity utilization rates rose at least +.5% MoM for all stages of production from crude processing to finished goods.

Rising industrial production and capacity utilization are hopeful signs of returning strength in the manufacturing sector, as inventories fall back to more comfortable levels.