Tuesday, August 16, 2011

USA Industrial Production at Post-Recession High! (Chart) *Highest since August 2008*

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Federal Reserve Statistical Release: Industrial Production and Capacity Utilization

Official Statement by the Federal Reserve (August 16, 2011) Industrial production advanced 0.9 percent in July. Although the index was revised down in April, primarily as a result of a downward revision to the output of utilities, stronger manufacturing output led to upward revisions to production in both May and June. Manufacturing output rose 0.6 percent in July, as the index for motor vehicles and parts jumped 5.2 percent and production elsewhere moved up 0.3 percent. The output of mines advanced 1.1 percent, and the output of utilities increased 2.8 percent, as the extreme heat during the month boosted air conditioning usage. At 94.2 percent of its 2007 average, total industrial production for July was 3.7 percentage points above its year-earlier level. The capacity utilization rate for total industry climbed to 77.5 percent, a rate 2.2 percentage points above the rate from a year earlier but 2.9 percentage points below its long-run (1972--2010) average.

Trend The short-term trend (3-month moving average) continues upwards, with 3 consecutive monthly increases and 4 increases in the past 5 months. The intermediate-term trend (6-month month moving average) continues upwards. The long-term trend (12-month moving average) continue upwards.

Cycle History The current July 2011 USA Industrial Production Index is a Post-Great Recession peak of 94.15 (preliminary). A Great Recession cyclical low of 83.53 was set in June 2009. The Pre-Great Recession peak was reached of 100.72 in September 2007.

Industrial Production Index (Chart) Below is a chart of the USA Industrial Production Index from the Pre-Great Recession cyclical peak of 100.72 in September 2007 through the latest month reported. After the Great Recession cyclical low of 83.53 in June 2009, USA industrial production increased 15 consecutive months (July 2009 through September 2010). In the 10 months following, there have been 3 monthly decreases and a Post-Great Recession high was set in July 2011 of 94.15 (preliminary).

Commentary The July 2011 USA Industrial Production Index of 94.15 (preliminary) is a new Post-Great Recession cyclical peak and very encouraging. The Index was significantly revised in prior months to the positive. Overall, the July 2011 increase was a very strong +0.8%, the largest increase since July 2010 (+0.8%). Monthly increases of 1.00%+ can occur, yet the current increase is considered robust expansion.

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