Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       

Blog Home
   Brian Wesbury
Chief Economist
Click for Bio
Follow Brian on Twitter Follow Brian on LinkedIn View Videos on YouTube
   Bob Stein
Deputy Chief Economist
Click for Bio
Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube
  Industrial Production Rose 0.7% in July
Posted Under: Data Watch • Industrial Production - Cap Utilization


Implications:  Industrial production surged in July at the fastest pace since 2014, extending June's gain and demonstrating strength in a sector that has begun to find its footing.  While the headline number is still down 0.6% from a year ago, it is up 0.8% at an annual rate in the past six months and up at a 3.9% annual rate in the past three months, an acceleration that signals the sector may be leaving behind the headwinds related to the drop in oil prices in the past couple of years.  This is reinforced by July's gain being broad-based, with every major headline number showing expansion.  We like to follow non-auto manufacturing, which strips out the most volatile sectors, and that rose 0.4% in July, the best growth since 2014.  Meanwhile, the more volatile sectors added to industrial growth in July.  Auto production increased 1.9% on top of a sharp 5.2% increase in June, hitting a new all-time record high.  Utility output jumped 2.1%, reflecting unusually warm July weather in the lower 48 states.  Perhaps the best news was that mining production jumped 0.7% in July, and is now up at a 4.7% annual rate in the past three months.  This month's gain was driven primarily by coal mining, however, oil and gas well drilling jumped 4.9% as well, the largest monthly gain since 2010. While mining (and energy in general) has been a drag on production over the past year, we expect activity in that sector to stabilize and even grow in the months ahead as energy prices are well off the lows from earlier this year.  Based on other commodity prices, oil prices should average at higher levels over the next several years.  Although we don't expect overall industrial production to boom any time soon – weak overseas economies will continue to be a headwind – we do expect solid growth in the year ahead.  In other recent news, the Empire State index, a measure of manufacturing sentiment in New York, fell to -4.2 in August from +0.5 in July, signaling that the improvement in the factory sector will not be a straight line.  That's what we should expect in Plow Horse Economy. 

Click here for PDF version 

Posted on Tuesday, August 16, 2016 @ 12:00 PM • Post Link Share: 
Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2022 All rights reserved.