US industrial production rises despite sharp drop in autos

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WASHINGTON: US factories increased production in July, despite a sharp decline in output of autos and parts, the Federal Reserve reported Thursday.

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Industrial production rose 0.2 percent compared to June, slightly less than expected by economists, as the manufacturing sector took a hit from the 3.6 percent drop in the autos, the report said.

“Following a six-month string of increases beginning in September 2016, factory output was little changed, on net, between February and July,” the Fed said, although production has gained 2.2 percent in the last 12 months.

As car sales have slowed sharply from the record pace in 2016, production of motor vehicles and parts has fallen in five months this year, and have dropped five percent in the latest 12 months.

However that decline was offset by increases in other areas, including computers and electronic products, electrical equipment and appliances, petroleum and coal, and chemicals.

Although manufacturing output, which represents more than 70 percent of the Industrial Production index, fell 0.1 percent compared to June, if motor vehicles and parts are excluded from the calculation, the sector was up 0.2 percent, the report said.

Mining output rose 0.5 percent, slowing significantly from the increases in the prior two months, but it has been up for five straight months on continued gains in oil and gas extraction.

The mining sector has gained just over 10 percent since July 2016.

Oil and gas well drilling however fell nearly a full percent compared to June, the first decline this year.

Utilities increased 1.6 percent, but are down 0.6 percent in the latest 12 months.

The share of industrial capacity in use in the month was steady at 76.7 percent, but is more than three percent below the average of the past 45 years.

Even mining, which is at 84.6 percent of capacity utilized is “well below” the long-run average, the Fed said.

AFP

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