Industrial production rose 3.0% month over month in July, according to Federal Reserve data. The indicator fell in March and April, but has since risen for three consecutive months. June’s data was revised up, from 5.4% to 5.7%. Industrial production is still 8.2% lower than it was in July 2019.
The Federal Reserve report measures output from factories, mines, and utilities. Of the three, manufacturing is the largest component. From June to July, manufacturing rose by 3.4%. Within this category, auto production rose by 28.3%, pushing the headline number up. Without car and car part manufacturing, the category saw 1.6% expansion.
Mining rose 0.8% monthly. This category includes gas and oil, which have had a disaster of a year. Prior to July, this sector shrank for five months in a row, seeing declines even before Covid hit. July brought a welcome end to that trend, but mining is still likely on shaky ground. Just last week, OPEC lowered its prediction for 2020 oil demand.
Utilities production increased by 3.3% as air conditioning use picked up.
Capacity utilization rose to 70.6%. This is up both from June’s 68.5% rate and 64.2% utilization in April. Capacity utilization measures slack in the industry. The improvement suggests that fewer machines and workers are idled.
The Institute for Supply Management recorded a manufacturing index of 54.2 in July, indicating that the industry is expanding. IHS Markit, who also measures manufacturing activity, reported a 51.3 index.