The Federal Reserve recently reported U.S. industrial production in June increased by 5.4%, building on the 1.4% increase in May.
Industrial output rises but remains below pre-pandemic levels
While the latest figures offer positive news, June’s industrial output remained 10.9% below that of February.
“The major market groups posted broad-based gains in June, but each still remained below its pre-pandemic level,” the Federal Reserve said in its latest industrial production report. “The jump in the output of motor vehicles and parts contributed to the largest gains among the market groups: Consumer durables, business equipment, and durable materials posted increases of 36.6 percent, 11.8 percent, and 7.4 percent, respectively. The indexes for business supplies and for defense and space equipment each rose more than 4 percent. The only decline among the major market groups was posted by energy materials, held down by further reductions in oil extraction.”
Even taking into account the positive figures in May and June, the industrial production index in the second quarter fell 42.6% at an annual rate.
The drop marked the “largest quarterly decrease since the industrial sector retrenched after World War II,” according to the Federal Reserve.
April industrial production fell 12.7%, while March production dipped 4.4%.
Manufacturing output jumps 7.2%
Drilling down further, manufacturing output jumped 7.2% in June, powered by a 105.0% rise in motor vehicles and parts output. Even so, motor vehicles and parts output was still down nearly 25% from February.
Meanwhile, mining production fell 2.9% and utilities output increased 4.2%.
Total industrial production in June was down 10.8% year over year. Industrial capacity utilization rose by 3.5 percentage points to 68.6% in June. The June capacity utilization rate came in 11.2 percentage points below the long-run average (which covers 1972–2019).
However, the June rate was up 1.9 percentage points from its trough during the Great Recession, the Fed reported.
Elsewhere, the index for nondurables increased 3.4% in June, while durable goods manufacturing rose 11.6%.