MAPI comments on industrial production report
The Federal Reserve reports that industrial production increased 0.3% in June, following no growth in May. Manufacturing industrial production also increased 0.3% in June. “Fortunately, manufacturing activity was revised upward for both April and May,” noted Daniel J. Meckstroth, Chief Economist for the Manufacturers Alliance for Productivity and Innovation. “The moderate gain in manufacturing production was not uniform across industries—production in 8 of the 20 main manufacturing industries declined while 12 industries posted growth.
“Importantly, though,” he added, “some of the largest manufacturing industries increased production at a fast pace in June. Machinery production rose 1.5%, motor vehicles and parts was up 1.3%, and miscellaneous manufacturing (driven largely by medical equipment and supplies) rose 1.4% last month. The mixed results in other manufacturing industries reflect inventory corrections to indicate slow domestic demand, adverse trade positions, and structural change.
“The quarter-to-quarter growth at annual rate, as GDP is measured, shows that manufacturing industrial production increased 5.1% in the first quarter and declined 0.2% in the second quarter of 2013,” Meckstroth said. “Inflation-adjusted GDP increased 1.8% in the first quarter and is forecast to increase 1.4% in the second quarter. Clearly, manufacturing production growth significantly outpaced overall economic growth early this year and has recently been correcting to the relatively slow pace of growth in the overall economy. Manufacturing should grow faster than GDP again in 2013, but the growth premium is narrowed by sluggish domestic demand and lackluster export opportunities.”