Key Facts
• On August 15, the Federal Reserve reported July industrial production fell 0.1% month-on-month.
• June industrial production had risen 0.4%; July saw a 1.4% year-on-year increase.
• Manufacturing output remained flat in July, indicating production stagnation amid tariff-related cost pressures.
• Economists had predicted a 0.1% decline in industrial production for July.
• June manufacturing output was revised upward from 0.1% to 0.3% growth.
• Durable goods manufacturing rose 0.3%, while non-durable goods fell 0.4% in July.
• Automotive production dropped 0.3%, partly due to seasonal factory shutdowns.
• Mining output fell 0.4%, and utilities output declined 0.2% in July.
• Capacity utilization in the industrial sector dropped to 77.5% in July, below the long-term average by 2.1 percentage points.
• Manufacturing capacity utilization decreased to 76.8%, 1.4 percentage points below the average.
Summary
The Federal Reserve’s report on July industrial production revealed a 0.1% month-on-month decline, following a 0.4% rise in June. Manufacturing output remained stagnant, reflecting challenges from tariff-induced cost increases. Durable goods production grew 0.3%, while non-durable goods fell 0.4%. Automotive production dropped 0.3%, influenced by seasonal factory closures. Mining and utilities output also declined, by 0.4% and 0.2%, respectively. Capacity utilization in the industrial sector fell to 77.5%, below the long-term average, with manufacturing utilization at 76.8%. Economists had anticipated the 0.1% decline, and June’s manufacturing data was revised upward. Tariffs on steel, aluminum, and automotive imports, imposed by the Trump administration, continue to impact production costs and activity. Economists warn that these measures may prolong production slowdowns.
