Financial Controls: USA Industrial Production Just Below Post-Recession High (Chart) *June increase first since March*

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Federal Reserve Statistical Release: Industrial Production and Capacity Utilization

Official Statement by the Federal Reserve (July 15, 2011) Industrial production increased 0.2 percent in June after having edged down 0.1 percent in May. For the second quarter as a whole, total industrial production increased at an annual rate of 0.8 percent. Manufacturing output was unchanged in June. In the second quarter, supply chain disruptions following the earthquake in Japan curtailed the production of motor vehicles and parts and restrained output in related industries; the production index for overall manufacturing was little changed for the quarter. The output of mines rose 0.5 percent in June, while the output of utilities climbed 0.9 percent. At 93.1 percent of its 2007 average, total industrial production in June was 3.4 percent above its year-earlier level. The capacity utilization rate for total industry remained unchanged at 76.7 percent in June, a rate 2.2 percentage points above the rate from a year earlier but 3.7 percentage points below its average from 1972 to 2010.

Trend The short-term trend is mostly flat, with 2 monthly decreases in the last 4 months. The intermediate-term trend (6-month month moving average) is slightly increasing. The long-term trend (12-month moving average) continue upwards.

Cycle History The USA Industrial Production Index set a Post-Great Recession peak of 93.09 in March 2011. 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 9 months following, there have been 4 monthly decreases and a Post-Great Recession high was set in March 2011 of 93.09.

Commentary The June 2011 USA Industrial Production Index of 93.07 (preliminary) is just below Post-Great Recession cyclical peak of 93.09 in March 2011. Th Index has been mostly level since the March 2011 peak. Overall, the June 2011 increase was only +0.2%, following a -0.1% decrease in May, and a -0.1% increase in April. Monthly increases of 1.00%+ can occur during robust expansion. Therefore, the June 2011 Index is somewhat disappointing and increases concern about the impact of high oil prices and a resulting slowdown of economic expansion. This is especially noteworthy as oil prices spiked upwards in March and henceforth and that was also the peak of the Industrial Production Index.

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