Industrial production in August 2016 decreased 0.4% after rising 0.6% in July. Manufacturing output was down 0.4%, while the utilities index declined 1.4%. Mining rose 1.0%, the fourth consecutive monthly increase, but is off 9.3% year-over-year. Total industrial production was 1.1% below August 2015’s average while industrial capacity utilization gained 0.4 ppt to 75.5%, a rate that is 4.5 ppts below its 1972 to 2015 average.
The Purchasing Managers' Index (PMI) fell 3.2 ppts in August to 49.4%. A value above 50% signifies expansion in the manufacturing industry with August’s reading the first month of negative sentiment following five consecutive months of positive sentiment. August’s PMI reflects growth in six of 18 industries, including computer & electronic products; miscellaneous manufacturing; and chemical products. The 11 industries reporting contraction in August include: electrical equipment, appliances & components; transportation equipment; machinery; primary metals; and fabricated metal products. Assessments from metal industry-related respondents were mixed in August as metal fabricators cited strong commercial construction activity and machinery manufacturers reported improvements over the first half of 2016, however, transportation equipment producers noted business conditions were generally flat.
The Consumer Confidence Index improved to 101.1 in August 2016, up 4.4 ppts from 96.7 in July, its highest level in nearly a year. The index’s change reflects stronger consumer sentiment regarding current business conditions, labor and income.
New orders for manufactured durable goods in July 2016, per the full report, advanced 4.4% or $9.6 billion to $228.6 billion. This followed a 4.3% decrease in June. July shipments of manufactured durable goods rose 0.1% or $0.3 billion to $232.7 billion, subsequent to June’s 0.4% gain. Shipments of computers and electronic products, up 1.7% or $0.5 billion to $27.1 billion, drove the increase in overall shipments.
Per the second estimate, real Gross Domestic Product (GDP) grew at an annual rate of 1.1% in Q2 2016, after expanding 0.8% in Q1 2016. This update reflects a 0.1 ppt decline from the Q2 2016 advance estimated growth rate of 1.2%. The Q2 increase reflected positive contributions from personal consumption expenditures and exports that were partly offset by negative results from private inventory investment, residential fixed investment, state and local government spending and nonresidential fixed investment. Imports, a detractor from GDP, increased.
In July 2016, the preliminary chemical and allied products Producer Price Index (PPI) fell to 263.0 from June’s reading of 265.2.