New data released September 17th by the Federal Reserve finds U.S. industrial production edged up in August after declining in July, with increases registered in manufacturing and mining output, as well as capacity utilization and utilities.
The Federal Reserve’s latest release on U.S. industrial production and capacity showed manufacturing output rose a half percent in August, recovering from the 0.4% drop suffered in July.
Manufacturing capacity utilization increased 0.4% in August, after decreasing roughly the same amount in July.
The Fed recorded a sharp rebound in mining output, up 1.4%, possibly attributable to companies resuming operations after Hurricane Barry disrupted production in the Gulf of Mexico.
Mining utilization is now 3.4% above its long-run average, said the Fed.
Manufacturing Increases Mixed
Both durable and non-durable goods both increased last month, offset by a sharp decrease in the “other manufacturing” category (publishing, logging) declined.
In the durable goods category, production edged up a half percent, with machinery (+1.6%), primary metals (+1.3%), and non-metallic mineral products (+1.1%) leading gains. All other industries remained virtually unchanged, apart from a one percent decline in motor vehicle parts.
The non-durable goods category also saw an increase of a half percent, led by plastics & rubber (+2.6%) and chemicals (+1.1%).
Losses in non-durable goods were led by apparel & leather (-1.2%) and food, beverage & tobacco products (-1%).
Related: A Closer Look at Growth in the U.S. Motor Vehicle Parts Industry
12-Month Look
On a year-over-year basis, the Fed reports manufacturing output has edged up 0.4%, measured from August 2018 to August 2019. Over the same time frame, mining shot up 5.1% while utilities grew 0.7%.
Looking at capacity utilization, which measures the extent to which industrial firms make use of their productive capacity, total industrial capacity utilization grew 2.2%.
Manufacturing utilization grew 1.3% on a year-over-year basis, while mining utilization surged 6.5%.
Manufacturers are now utilizing at a rate of 75.7%, a rate 2.6% lower than its long-run average.
Other Data Mixed
Recent data on U.S. manufacturing continues to throw us mixed signals. This month, the Institute for Supply Management reported its index of manufacturing activity contracted for the first time in three years.
The most recent labor report found manufacturers in the U.S. added just 3,000 jobs, following record hiring in 2018 (+284,000 manufacturing jobs). It should be noted that employment in the manufacturing sector is at its highest level since November 2008, but nonetheless the rapid expansion of the past two years is decidedly slowing.
Other economic reports found that manufacturing labor productivity declined 2.2% in the second quarter, and the IHS Markit Index, which is another purchasing managers’ index similar to the ISM’s, found that manufacturing activity also contracted, with their reading coming in at 49.9% in August.
This most recent manufacturing output report, however, suggests that the U.S. manufacturing sector may be holding its own, even in the face of an intensifying trade war between the U.S. and China.
Related: U.S. Manufacturers Express Cautious Optimism Amid Easing Demand, Trade Woes
Manufacturers continue to expand and break ground on new facilities. You can read about that here.
Additionally, the U.S. revamped the Buy American Act, which aims to increase federal procurement of U.S.-made goods, while expanded worker training programs continue to revitalize ailing industrial towns and cities across the U.S.
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