- by New Deal democrat
Industrial production is much less central to the US economic picture than it was before the “China shock,” since so much production moved overseas, meaning US consumers buy much more imported goods than they used to.
Still it is an important if diminished coincident indicator. This morning’s report for July can be summed up, as per the title of this post, as “meh.”
Headline industrial production (blue in the graph below) declined -0.1%% for the month, but was balanced by a +0.1% revision for June. Manufacturing production was unchanged in July, and June’s +0.3% increase was unrevised.
Nevertheless earlier this year saw a roughly a 1% increase in production, which has been maintained since:
Total production made a new post-pandemic high in June, and manufacturing production is just below its high of October 2022.
Further, industrial production is 1.4% higher than one year ago, and manufacturing production is higher by 1.6% than it was one year ago:
Although I won’t bother with a graph this month, earlier this year the big difference was the contribution of utility - especially electric utility - production, which is used both for mining crypto, and also for AI-related data mining. Which is an important reason why prices for electric power have become a problem child in the consumer inflation reports this year.
Along with retail sales, this is the second coincident positive for the economy this morning. And, to wrap it all up, the fact that both consumer spending and industrial production are holding up are important reasons why I have not gone on “recession warning” (vs. “watch”) at this point.
