Implications:  Industrial production declined in June, falling for the second month in a row with every major category contributing to the drop.  The biggest source of weakness in June came from the manufacturing sector where activity fell 0.3%.  Looking at the details, both auto and non-auto manufacturing posted declines, dropping 3.0% and 0.1%, respectively.  Given the trend of consumers shifting their preferences back toward services and away from goods, we expect manufacturing activity to continue to weaken in future months.  We are still forecasting a recession ahead with the goods sector leading the way. The utilities sector (which is volatile and largely dependent on weather) was another drag on the headline number in June, posting a decline of 2.5%.  Lastly, output in the mining sector declined 0.2%.  Less drilling of new oil wells more than offset gains in oil and gas extraction in June.  Given that the mining index remains below its pre-pandemic highs, we expect this series to be a lifeline for industrial production in the near term.  In other recent factory news, the Empire State Index, a measure of New York factory sentiment, fell to +1.1 in July from +6.6 in June. We also got data on the NAHB Housing Index this morning, a measure of homebuilder sentiment, which rose to 56 in July from 55 in June.  This is the seventh consecutive gain and the highest reading in over a year. An index reading above 50 signals that a greater number of builders view conditions as good versus poor and that sentiment is now positive following nearly a year of pessimism due to rapidly rising mortgage rates.  Many owners of existing homes are holding their homes dear because of having locked-in long-term fixed mortgages at sub-3% rates before 2022.  As a result, prospective homebuyers are turning to the new home market, buoying builder optimism.    

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