May 16, 2023

Industrial production rose 0.5% in April after having been unchanged in March.    In the past year production has risen 0.2%.

Breaking industrial production down into its three basis categories — manufacturing, mining, and utilities –the Fed reported that manufacturing production jumped 1.0% in April after  having fallen 0.8% in March.  In the past year manufacturing output has declined 0.9%.

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 surged by 9.3% in April after declining 1.9% in March.  In the past year motor vehicle production has risen 8.5%.  Excluding the big increase in automobile production, manufacturing productioin rose 0.4% in April..

High tech production climbed 1.5% in April after rising 0.3% in March.   High tech production has risen 1.8% in the past year.

Mining (14%) output rose 0.6% in April after declining 1.3% in March.   Mining has risen 5,6% in the past year.  The strength in the mining component is being driven by oil drilling activity which has increased 8.9% in the past year, but it has leveled off in the past six months.  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 12.3 million barrels per day and remains well below the level of output that existed prior to the recession.

Utilities output declined 3.1% in April after jumping 8.4% in March  Over the past year utility output has declined 0.4%.  This component is extremely volatile from month-to-month as the weather fluctuates.

Capacity utilization in the manufacturing sector rose 0.7% in April to 78.3% after having declined 0.7% in March.   It remains roughly in line with the 77.4% level that is generally regarded as effective full capacity utilization.

GDP appears to be on track for a 2.0% increase in the first quarter.  We expect it to grow at a 1.3% pace in 2023 as real interest rates remain slightly negative through midyear, firms keep hiring at a relatiavely rapid pace, the unemployment rate should rise only slightly from a 50-year low of 3.4%, and as the housing sector begins to rebound.

Stephen Slifer


Charleston, SC