Highlights of the Federal Reserve’s report on U.S. industrial production for July: manufacturing output rose 1% % during the month, mostly because of a jump in motor vehicle assemblies which rose to an annual rate of 5.9 million units in July from 4.1 million in June. Auto sales got a big boost from the government's "cash for clunkers" program, which provides incentives to buy new cars.
Excluding motor vehicles and parts, industrial output fell 0.1% in July. Meanwhile, the capacity utilization rate, a measure of slack in the economy, edged up to 68.5%, slightly higher than economists had expected but still 12.4 %age points below the 1972-to-2008 average. The output of utilities fell 2.4%, reflecting unseasonably mild temperatures in July, while mining output rose 0.8%.
The production of consumer goods rose 0.6% in July, as an increase of 7.4% in consumer durables more than offset a decrease of 0.9% in nondurable consumer goods. The output of consumer durables was boosted by a 17.4% increase in the production of automotive products. The indexes for home electronics and for appliances, furniture, and carpeting were little changed, while the index for miscellaneous goods increased 0.8%.
The output of business equipment moved up 0.5% in July, the first increase for this category this year. The output of transit equipment increased 4.6% as a result of the sharp rise in motor vehicle output and a rise in the production of civilian aircraft. The index for industrial and other equipment decreased 0.5%, after having fallen at an average rate of 1.7% per month in the second quarter; the index for information processing equipment edged lower. The output of defense and space equipment rose 0.6%.