September 17, 2024
Industrial production rose 0.8% in August after having fallen 0.9% in July. The Fed reported that preparations for Hurricane Beryl caused about one-half of the overall decline in July. The increase in August represents the rebound in production in the wake of the hurricane.. In the past year industrial production has been unchanged.
Breaking industrial production down into its three basic categories — manufacturing, mining, and utilities. Manufacturing production climbed 0.9% in August after having fallen 0.7% in July. In the past year manufacturing output has risen 0.2%.
In the motor vehicle sector production jumped 9.8% in August after having plunged by 8.9% in July. In the past year motor vehicle production has risen 0.3%. However, this component is extremely volatile from month to month.
Excluding the motor vehicle sector, manufacturing output rose 0.3% in August after having declined 0.1% in July. In the past year it has risen 0.2%.
High tech production jumped 1.7% in August after having gained 0.9% in July. High tech production has risen 9.1% in the past year. 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. At the same time firms are all experimenting with AI in an effort to figure out how it might help them boost productivity. Thus, we expect high tech production to continue to climb rapidly in the months ahead.
Mining (14%) output rose 0.8% in August after having declined 0.4% in July. Mining has risen 0.1% in the past year.
Utilities output was unchanged in August after declining 3.0% in July. Over the past year utility output has declined 0.9%. This component is extremely volatile from month-to-month as the weather fluctuates.
Capacity utilization in the manufacturing sector rose 0.6% in August to 77.2% after having declined 0.6% in June. It is currently very close to the 77.4% level that is generally regarded as effective full capacity utilization.
GDP appears to be on track to grow at a 1.0% pace in the second quarter as firms keep hiring at a relatively rapid pace, the unemployment rate has risen only slightly to 4.2%.. However, we expect GDP to slip to 1.4% in the second half of the year as consumer spending finally begins to slow and as the housing sector continues to struggle.
Stephen Slifer
NumberNomics
Charleston, SC
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