U.S. Industrial Production Unexpectedly Flat Amid Steep Drop In Utilities Output
16 Julio 2019 - 5:11AM
RTTF2
With a steep drop in utilities output offsetting increases in
manufacturing and mining output, the Federal Reserve released a
report on Tuesday showing U.S. industrial production was
unexpectedly flat in the month of June.
The Fed said industrial production was unchanged in June after
climbing by 0.4 percent in May. Economists had expected production
to edge up by 0.2 percent.
Industrial production was unchanged as utilities output plunged
by 3.6 percent, with milder-than-usual temperatures reducing demand
for air conditioning.
On the other hand, the report said manufacturing output climbed
by 0.4 percent, partly reflecting a 2.9 percent jump in production
of motor vehicles and parts.
Excluding autos, production rose by 0.2 percent, although
Michael Pearce, Senior U.S. Economist at Capital Economics, noted
manufacturing output still declined by 2.2 percent annualized in
the second quarter.
"With the global backdrop still weak and the survey evidence
consistent with manufacturing output declining, we expect the
manufacturing sector to remain weak in the second half too," Pearce
said.
The Fed said mining output also rose by 0.2 percent, but Pearce
said output in the sector is likely to begin declining modestly in
the second half of the year unless the recent rally in oil prices
continues.
The report also said capacity utilization for the industrial
sector edged down to 77.9 percent in June from 78.1 percent in May.
Economists had expected capacity utilization to come in
unchanged.
Capacity utilization in the mining sector crept up to 75.9
percent, while capacity utilization in the mining sector dipped to
91.5 percent and capacity utilization in the utilities sector
slumped to 74.6 percent.
"Rising spare capacity reduces the need for firms to invest and
will help maintain downward pressure on core inflation, both of
which will be key reasons why the Fed is likely to cut interest
rates in the coming weeks," said Pearce.
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