Industrial Production Rebounds, As Expected

Industrial production in June rose +.5% MoM, and right at consensus. This indicator has been bouncing from gain to loss over the past year as inventories have been pared back. Capacity utilization also rebounded to 81.7% (81.6% consensus), and a new high for the year in June.

Increases in industrial production were broadbased across industries. Manufacturing rose +.6% MoM. Motor vehicle output rose +2.5% MoM while machinery production fell -1.2% MoM. These were both countercyclical to their behavior over the past year when vehicle production fell -1.7% YoY and machinery grew +.9% YoY. As expected, utility demand grew +.3% MoM. Excluding motor vehicle production, factory output rose +.4% MoM.

By product groupings, home electronics(+2.6% MoM) saw the greatest rebound followed by construction supplies(+1% MoM).

Mining has the highest capacity utilization at 90.7% followed by utilities at 85.6%. Semiconductors had the lowest factory usage rate at 72.4% followed by manufacturing at 80.3%. The overall capacity utilization rate at 81.75 is still .6% below the level of a year ago.

Output in the second quarter accelerated to a 2.9% annualized pace from the 1.1% annualized pace in the first quarter.