Industrial production in July 2016 gained 0.7% after advancing 0.6% in June. July’s increase was the largest for the index since November 2014. Manufacturing output rose 0.5% largely due to an increase in motor vehicle assemblies, while the utilities index advanced 2.1% as warmer-than-usual weather boosted demand for air-conditioning. Mining increased 0.7%, the third consecutive monthly gain, but is down 10.2% year-over-year. Total industrial production was 0.5% below July 2015’s average while industrial capacity utilization increased 0.5 percentage points (ppts) to 75.9%, a rate that is 4.1 ppts below its 1972 to 2015 average.
The Purchasing Managers' Index (PMI) fell by 0.6 ppt in July to 52.6%. A value above 50% signifies expansion in the manufacturing industry with July’s reading the fifth consecutive month of positive sentiment. July’s PMI reflects growth in 11 of 18 industries, including miscellaneous manufacturing, chemical products, fabricated metal products, and petroleum & coal products. The industries reporting a decrease included electrical equipment, appliances & components, plastics & rubber products, machinery, primary metals and transportation equipment. Metal industry-related respondents’ assessment was mixed, with fabricated metal producers citing higher international capital spending, although machinery manufacturers cited slowing retail sales amid higher steel prices and transportation equipment producers noted slowing demand.
The Consumer Confidence Index was relatively unchanged at 97.3 in July 2016, down 0.1 ppt from 97.4 in June. The index’s change reflects slightly lower consumer sentiment regarding current business conditions, labor and income.
New orders for manufactured durable goods in July 2016, per the advance report, increased 4.4% or $9.7 billion to $228.9 billion. This followed a 4.2% decline in June. July shipments of manufactured durable goods rose 0.2% or $0.4 billion to $232.9 billion, subsequent to June’s 0.5% decrease. The increase in shipments was driven by computers and electronic products, which advanced 1.5% or $0.4 billion to $27.1 billion after moving up in the past three consecutive months.
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.