Revisions Take Some Flare Out of Upward Surprise in IP

Economics Group of Wells Fargo Bank, N.A. Summary Industrial production jumped 1.0% in July, but downward revisions to June and concentrated strength in utilities and auto manufacturing take some of the flare out of the headline growth rate. Manufacturing production has more-or-less moved sideways this year amid a stalling in goods demand. IP Bounces as Utilities Pop Off and Auto Sales Jump Industrial production bounced in July, but factoring in downward revisions to June takes some of the flare out of the headline 1.0% gain in output. Total output is now just 0.2% ahead of where it was two months earlier. All three of the major industries saw increased production last month. Manufacturing bounced 0.5%, reversing an equivalent decline the month prior, utilities rose a solid 5.4% and mining output increased 0.5%. Despite representing just about 10% of overall output, utilities was the largest contributor to the overall gain in production last month (chart). The 5.4% increase snapped a three-month streak of declines and was unsurprising given the scorching temperatures seen across the country last month—Arizona, New Mexico, Maine and Florida all saw their hottest Julys on record. We’d usually be braced for a snap in the other direction next month after a +5% bounce, though heat waves across the Northwest thus far in August suggest utilities demand may remain elevated. READ FULL ARTICLE >>