Production in the U.S. cooled in August as automakers scaled back following a surge in output the prior month.I'll have more on this tomorrowIndustrial production increased 0.2 percent last month after rising 0.6 percent in July, figures from the Federal Reserve showed today. Factory output climbed 0.5 percent excluding autos, the most since May.
Ford Motor Co. is among companies not looking to boost U.S. output on concern a lack of jobs will hold back consumer spending, which accounts for about 70 percent of the world’s largest economy. Orders from overseas and the need for some companies to replace outdated equipment are supporting other manufacturers including Caterpillar Inc.
“Most of the signs are still pointing to growth in the factory sector, although it’s going to be more modest than the explosion we saw earlier in the year,” Omair Sharif, a senior economist at RBS Securities Inc. in Greenwich, Connecticut, said before the report. “You’ll see manufacturing grow more at a pace that’s in line with the rest of the economy.”
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5 comments:
Inside the Industrial Production
numbers....
Industrial Production for Business Equipment was up .7 following last months number of 1.0%...year over year this number
is up 9.9%... The importance of this is that this number mirrors
closely the equipment and software-business spending component of GDP.
In turn the business spending component in the past has mirrored payroll growth
The industrial production numbers don't even matter much anymore. For one, the number has been inflated because of the explosion in corporate profits (the value of assembly), while the vast amount of real production has been off-shored. Second, manufacturing employment remains in a significant downward trend and real employee wages, salaries, and benefits remain stagnant.
The real fundamentals of US manufacturing and the enormous amount of downward pressure that imports will put on GDP going forward should be clear in the graph posted on calculated risk recently:
http://www.calculatedriskblog.com/2010/09/la-port-traffic-in-august-imports-surge.html
Imports subtracted a substantial amount from GDP in Q2 this year and will continue to subtract almost a couple percentage points each quarter for the foreseeable future, unless policies are changed and these problems addressed. From the big subtractions continuing from the trade imbalance, the continued stagnation in personal income ex-transfer payments, high consumer and public debt levels, peak in stimulus spending, inventory rebuilding over, drop in state and local govt spending, etc it is hard to make a case that 2%+ GDP growth in the US is possible over the next four quarters or even much longer. Although, as we all know, the entire economy currently depends on action by the Federal Reserve. Without continued money printing, the future of the economy is continued depression.
1.) For one, the number has been inflated because of the explosion in corporate profits (the value of assembly), while the vast amount of real production has been off-shored.
This is utter nonsense, as in, it makes absolutely no sense.
2.) Second, manufacturing employment remains in a significant downward trend and real employee wages, salaries, and benefits remain stagnant.
this is due to increased productivity in the manufacturing process. Compare the number of employees needed 50 years ago to now.
3.) Imports subtracted a substantial amount from GDP in Q2 this year and will continue to subtract almost a couple percentage points each quarter for the foreseeable future, unless policies are changed and these problems addressed. From the big subtractions continuing from the trade imbalance,
As I mentioned when I looked at the 2Q GDP revision, the effect of the second quarter imports segment was an extreme statistical anomily. The last time we have a downward revision that large was 1984.
4.) .... t is hard to make a case that 2%+ GDP growth in the US is possible over the next four quarters or even much longer.
That has been my thesis for the last year.
I should also add -- I'm sure IPs worthlessness is in inverse proportion to the fact its been increasing for the better part of a year. If it was declining, I'm sure it would be a great statistic which we should religiously track
Anon....
" Imports subtracted a substantial amount from GDP in Q2 this year and will continue to subtract almost a couple percentage points each quarter for the foreseeable future,"
Imports always subtract from GDP but Net exports will more than likely not subtract from GDP this
quarter,,,,also some Imports seep
back into GDP in a positive way
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