Industrial production posted solid gains in August

September 17, 2024

Industrial production rose 0.8% in August after falling a downwardly revised 0.9% in July. That marks the largest increase since May; it is also a strong beat of the consensus. The industrial production index now stands at 0% year-over-year, incredibly weak but still up from July's -0.2% reading. Gains were driven by a recovery in motor vehicles and parts following lackluster assemblies in July. Motor vehicles and parts rebounded 10.5% in August after dropping 9% in July. Excluding motor vehicles and parts, the index still rose 0.3%.

Manufacturing output rose 0.9%. Consumer goods production rose 0.7% on a 10.5% increase in motor vehicles and parts. That offset a small decline in the index for nondurable consumer goods. Light vehicle production and assemblies reflected that strength. Outside of automotives, there were increases in durable goods like home electronics and home appliances and furniture, up 1.8% and 2.5% respectively. Energy fell 1.4%. All other nondurables fell 0.3%, mainly on clothing and food.

Business equipment was up 1.4% after two months of declining. A bounce-back in transit equipment, up 6.6%, drove much of the growth. Defense and space equipment rose 0.5%, while other industrial equipment rose 0.4%. Information processing and related equipment was down 0.6% after a strong July. Utilities were flat in August after plummeting the previous month. A drop in electric power generation offset an increase in natural gas distribution.

Manufacturing capacity utilization recovered to 77.2% after a 76.6% reading in July, back to its levels in June. Semiconductor capacity utilization increased to 81.1%, its highest reading since May but still subdued compared to its average over the past three years. New fabrication facilities are coming online, depressing the overall index.