Wednesday, July 16, 2008

U.S. industrial production advanced 0.5 percent in June 2008

The chart below speaks for itself. There is not much to add to it other than CapUt is down at the primary, semi-finished and finished processing level and up only on the crude processing level. In our opinion this is a direct result of high oil prices and not of a marked slowdown in the economy. A good example is Andrew Liveris, Dow Chemical CEO, who is ideling capacity in his plants to cover cash costs. On June 24 he said on CNBC:

"When you can't run the plant to make policy of cash costs you just have to bring it down. Let's call it managing the assets so we don't make negative margins. We are trying to maintain our earnings."

Indeed, the economy is barely slowing down (see Brian Wesbury yesterday), as seen in IP data for non-durable consumer goods, business equipment and non-energy industrial materials which are still up 10% to 30% respectively from their 2002 base levels.

from the release:

Industrial production advanced 0.5 percent in June after having fallen 0.2 percent in May. Industrial production for the second quarter as a whole dropped 3.1 percent (annual rate) from the first quarter. Manufacturing output gained 0.2 percent in June and was boosted by a jump of 5.4 percent in the output of motor vehicles and parts; activity resumed at motor vehicle parts and assembly plants that had been idled by a strike that began in late February and ended in late May. Excluding motor vehicles and parts, factory output edged down 0.1 percent. Outside of manufacturing, the output at mines increased 1.1 percent, and the output at utilities was up 2.1 percent. At 111.7 percent of its 2002 average, total industrial production was 0.3 percent above its level of a year earlier. In June, the capacity utilization rate for total industry moved up to 79.9 percent, a level 1.1 percentage points below its average for 1972-2007.

click to enlarge


Federal Reserve Statistical Release G.17

read also: Wesbury sees close to four percent growth in the second quarter
Tuesday, July 15, 2008

read also: The rude cause of inflation raises the specter of recession
Tuesday, June 24, 2008

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