U.S. industrial production grows more than forecast in July

The Federal Reserve reported on Tuesday the U.S. industrial production increased 0.9 percent m-o-m in July, following a revised 0.2 percent m-o-m rise in June (originally a 0.4 percent m-o-m advance). This represente the largest monthly gain in industrial production since March.

Economists had forecast industrial production would increase 0.5 percent m-o-m in July.

According to the report, the manufacturing output rose 1.4 percent m-o-m, mainly due to a 11.2 percent m-o-m jump in production of motor vehicles and parts, as a number of vehicle manufacturers trimmed or canceled their typical July shutdowns, though vehicle assemblies continued to be constrained by a persistent shortage of semiconductors. In the meantime, the mining production increased 1.2 percent m-o-m in July, while the output of utilities fell 2.1 percent m-o-m.

Capacity utilization for the industrial sector rose 0.7 percentage point m-o-m to 76.1 percent in July. That was 0.4 percentage points above economists’ forecast but 3.5 percentage points below its long-run (1972-2020) average.

In y-o-y terms, the industrial output surged 6.6 percent in July, following a revised 9.9 percent climb in the prior month (originally a 9.8 percent jump). This was the smallest annual increase in industrial production since March, as the last year's low base effect fades away.