The Federal Reserve is publishing a 0.2% increase for August 2010 in industrial production Here is a detailed report. Last month's blow out was revised significantly, from 1.0% to 0.6%.

 

 

Automotive dropped -5.2% in cars, trucks & parts industrial group, durable goods as a whole, dropped -3.0%. Consumer parts materials also dropped -3.2%. Oil and Gas wells drilling was up 3.3% for the month. For the year, industrial production is up 6.2%, but still 6.8 % below 2007 levels.

Excluding motor vehicles and parts, manufacturing output increased 0.5% in August after having gained 0.2% in July. Production at mines moved up 1.2% in August, while the output of utilities moved down 1.5%.

Major industry groups breakdown of industrial production.

• manufacturing: 0.2%
• mining: +1.2%
• utilities: -1.5%%

Below is the graph of raw capacity, not a percentage, just how much capacity does the U.S. have to make stuff.

 

 

Total capacity for the month was unchanged. Raw capacity has been flat lined for some time, but notice that total raw capacity has declined since the start of this recession. Advanced technologies manufacturing raw capacity was up 0.8% for the month and utilities increased 0.1% in raw capacity for the month.

For industrial production the marketing group major changes are (monthly rate):

• Final Products: -0.1%
• Consumer goods: -0.4%
• Business equipment: +0.7%
• Nonindustrial supplies: +0.3%
• Construction: +0.8%
• Materials: +0.4%

 

Below is industrial production since December, 2001. As one can see we have not recovered to even pre-recession levels.

 

 

Below is manufacturing industrial production, also not at pre-recession levels.

 

 

Capacity utilization, or of raw capacity, how much is being used, increased to 74.7%, from last month's 74.6%. Below are capacity utilization's monthly percent change breakdown. It is unclear if these values are annualized, so consider them raw monthly percentage changes. As one can see capacity utilization is negative or flat.

• manufacturing: +0.1%
• mining: +1.0%
• utilities: -1.4%

• crude: +0.9%
• primary: -0.1%
• finished: +0.1%

The below graphs show the overall decline of U.S. capacity utilization. Capacity utilization is how much can we make vs. how much are we using. These graphs show the U.S. is simply not producing what it is capable of, a reflection of the output gap. Note, this index is normalized to a specific year, currently from most reports, the 2007 yearly average (see year in the graph). Therefore, one cannot take absolute values of capacity utilization, i.e. 80%, and claim this is an indicator of a healthy economy, for it all depends on what year capacity utilization is normalized to. One can take the slope, or change from the peak of a recession and determine recovery, but again, these percentages are relative, they are not absolute ratios to a static point in time. Also recall utilization is a percentage of real total capacity. Notice that total capacity in the United States has declined.

 

 

Below is the Manufacturing capacity utilization graph. Too often the focus is on the monthly percent change, so it's important to compare capacity utilization to pre-recession levels.

 

 

Last month's overview of the Industrial Production economic report unrevised is here.