September 15 2023

Industrial production jrose 0.4% in August after having jumped 0.7% in July.   In the past year industrial production has risen 0.2%.  On balance, the manufacturing sector remains relatively flat.

Breaking industrial production down into its three basic categories — manufacturing, mining, and utilities –the Fed reported that manufacturing production rose 0.1% in August after having climbed 0.4% in July.  In the past year manufacturing output has declined 0.6%.

Growth in orders has slowed in recent months which has created an opportunity for production to catch up.  The manufacturing sector no longer has to deal with supply constraints as suppliers are actually able to provide faster deliveries in recent months for the first time in years.

Automobile production fell 5.0% in August after having jumped 5.1% in July.  In the past year motor vehicle production has risen 5.9%.  Excluding the big drop in automobile production, manufacturing production rose 0.6% in August after having been unchanged in July.

High tech production climbed 0.8% in August after halving jumped 1.6% in July.  In fact this is seventh straight month that high tech production has increased.   High tech production has risen 9.7% in the past year.  This is the one rosy sector in the manufacturing world.  We would suggest that if firms are unable to find an adequate supply of workers, they will turn to technology in an effort to boost production and satisfy the demand for their products.

Mining (14%) output rose 1.9% in August after gaining 1.8% in July.   Mining has risen 1.8% in the past year.  Within the mining category, oil drilling activity jumped rose 0.9% in August after climbing 4.4% in July.  It has risen 1.2% in the past year.  One of the ongoing problems is the administration’s dislike for the fossil fuel industry and its efforts to, essentially, drive it out of business in favor of more environmentally friendly means of production.  Oil production is steady at 12.8 million barrels per day which is roughly the same as the level of output that existed prior to the recession.

Utilities output gained 0.9% in August after surging 4.4% in July. .  Over the past year utility output has risen 1.2%.  This component is extremely volatile from month-to-month as the weather fluctuates.

Capacity utilization in the manufacturing sector was unchanged in August at 77.9% after having risen 0.2% in July.   It remains slightly higher the 77.4% level that is generally regarded as effective full capacity utilization.

GDP appears to be on track for a 3.5% increase in the third quarter.  We expect it to grow at a 1.7% pace in the fourth quarter as real interest rates remain relatively low, firms keep hiring at a relatively rapid pace, the unemployment rate remains steady at a near 50-year low of 3.8%, and the housing sector begins to rebound.

Stephen Slifer


Charleston, SC