US Industrial Production Hints At Soft Patch Easing

The 0.2% rise in US industrial output was in line with market expectations and there did not seem to be much of a market reaction. Nevertheless, the report is yet another piece of news that suggest that the soft(er) patch the US hit in Q2 is slowing easing. May-July series were revised lower, but that still seems consistent with the soft patch easing.

Manufacturing output, the key element of the report for most investors, rose 0.2%, but the market already knew that auto output fell. There was a surge in auto output in July (~9.5%) as some plants were not closed for the summer,which is often the case. The new information really was that excluding autos, manufacturing output rose 0.5%, the best since May.

Even here there is some interesting tidbits. Output of business equipment remained firmed with a 0.7% increase on top of July's 1.9% gain. The output of tech goods rose 1%. This likely speaks to the demand for capital equipment.

Surprisingly given the unusually hot weather, utility output actually fell. The 1.5% decline comes on the heels of the 0.3% decline in July.