Industrial production in June 2016 increased 0.6% after decreasing 0.4% in April. Manufacturing output rose 0.4% largely due to an increase in motor vehicle assemblies, while the utilities index advanced 2.4% as warmer weather boosted demand for air-conditioning. Mining rose 0.2%, the second consecutive monthly increase, but is down 10.5% year-over-year. Total industrial production was 0.7% below June 2015’s average while industrial capacity utilization increased 0.5 percentage point (ppt) to 75.4%, a rate that is 4.6 ppts below its 1972 to 2015 average.
The Purchasing Managers' Index (PMI) rose by 1.9 ppt in June to 53.2%. A value above 50% signifies expansion in the manufacturing industry with June’s reading marking four consecutive months of positive sentiment. June’s PMI reflects growth in 13 of 18 industries including petroleum & coal products; fabricated metal products; miscellaneous manufacturing; computer & electronic products; chemical products; primary metals and machinery. The three industries reporting a decrease were electrical equipment, appliances & components; transportation equipment; and plastics & rubber products. Metal industry-related respondents were optimistic, citing good business conditions and improved orders and production for the fabricated metal products and machinery sector, with other respondents citing either steady or strong growth in the U.S.
The Consumer Confidence Index rose to 98.0 in June 2016, from 92.6 in May. The index’s improvement reflects moderately stronger consumer sentiment regarding current business conditions, labor and income.
New orders for manufactured durable goods in May 2016 decreased by 1.0% or $4.6 billion to $236.2 billion. This follows a 1.8% increase in April. May shipments of manufactured durable goods fell 0.2% or $0.6 billion to $231.6 billion, subsequent to April’s 0.4% increase. Shipments have been down three of the last four months, largely due to transportation equipment shipments, which in May were down 0.4% or $0.4 billion to $80.0 billion.
Per the third estimate, real Gross Domestic Product (GDP) grew at an annual rate of 1.1% in Q1 2016, versus 1.4% growth in Q4 2015. This update reflects a 0.3 ppt improvement from the Q1 2016 second estimate growth rate of 0.8%. The Q1 increase reflected positive contributions from personal consumption expenditures, residential fixed investment, state and local government spending and exports that were partly offset by lower contributions from nonresidential fixed investment, private inventory investment and federal government spending. Imports, a detractor from GDP, decreased.
In June 2016, the chemical and allied products PPI increased to 265.2 from May’s reading of 263.8.