US industrial production drops unexpectedly July
US industrial output recorded a large and unexpected drop in July, pointing to the possibility that at least in manufacturing the current downturn still had further to run, according to some economists.
According to the Department of Commerce, total industrial production weakened at a month-on-month pace of 0.2% in July (consensus: 0.3%), leaving the year-on-year rate of change at 0.5%.
Output of consumer goods goods did increase by 0.2% versus June, together with an improvement in defence and space equipment, Commerce said.
But those increases were more than offset by declines in all of the remaining market groups, with output of non-industrial supplies shrinking by 0.6% and that of materials down by 0.3%.
Production of business equipment also fell, by 0.4%.
By industry groups, manufacturing output declined by 0.4% alongside a drop of 1.8% in mining, while utilities saw a rise of 3.1%.
Within manufacturing, durables, nondurables, and other manufacturing (publishing and logging) all posted declines and within durables itself, most major categories also recorded falls, with wood products, machinery, and nonmetallic mineral products seeing the biggest drops.
Aerospace and miscellaneous transportation equipment were the only categories that enjoyed sizeable gains.
The overall rate of capacity utilisation in industry meanwhile slipped from 77.8% in June to 77.5% for July (consensus: 77.9%).
"With the latest data from China and the euro-zone pointing to continued weakness, and trade policy uncertainty intensifying, the manufacturing downturn probably still has further to run," said Andrew Hunter at Capital Economics.
"[...] But the latest surveys provide some reason for optimism and, as the retail sales data released earlier today highlight, there is still little evidence that this malaise is spreading to the wider economy."