According to the Fed last Friday: “Industrial production fell 1.2 percent in August after having risen 0.5 percent in July.  Hurricane Isaac restrained output in the Gulf Coast region at the end of August, reducing the rate of change in total industrial production by an estimated 0.3 percentage point.  Manufacturing output decreased 0.7 percent in August after having risen 0.4 percent in both June and July… At 96.8 percent of its 2007 average, total industrial production in August was 2.8 percent above its year-earlier level.”

Industrial production fell 1.2% in August.

Capacity utilization for total industry moved down 1.0 percentage point to 78.2 percent, a rate 2.1 percentage points below its long-run (1972–2011) average.”

Down 1% from last month and 2.1% below long run average.

PMPA will have our Business Trends Index for August numbers compiled later this week, but we were surprised by the plunge on IP to levels below February 2012. The direction of revisions of prior months’ data downwards is not optimistic, nor is the full point drop in Capacity Utilization.

3 Reasons to Rethink our Optimism?

  • Both Industrial Production and Capacity Utilization fell.
  • Direction of revised numbers were all negative.
  • You can’t argue with Capacity Utilization being sub-longterm average.

Challenge question for your shop: So what are YOU going to DO about it?

Fed Release


MAPI forecasts that manufacturing production will increase 6% in 2011 and advance by 4% in 2012.
Industry Week  cites Manufacturers Alliance / MAPI report  and chief economist in their June 16th on line article.
“Manufacturing, though, is currently well positioned for growth. There is pent-up demand for consumer durables, firms are profitable and need to spend more for both traditional and high-tech business equipment, and strong growth in emerging economies is driving U.S. exports,” Meckstroth, added.
The group’s report found that manufacturing industrial production, measured on a quarter-to-quarter basis, grew at a 7% annual rate in the first quarter of 2011, after expanding at a 3.4% annual rate in the fourth quarter of 2010.
Manufacturing continues to lead the recovery. Hopefully this won’t be derailed by the continued hostile tone of regulators in Washington, upcoming Dodd Frank requirements, etc. etc..

Regulations Photo credit