By: Joseph Bonney
Industrial production up slightly, but manufacturing sector remains listless
U.S. industrial production rose 0.2 percent from May to June but manufacturing activity was flat, the Federal Reserve said, as supply chains struggled to recover from the Japan earthquake and housing-related industries stayed in slow gear.
The increase in overall industrial activity was powered by strong gains in mining and utilities.
Total industrial production was 93.1 percent of its 2007 average and 3.4 percent higher than in June 2010. Total capacity utilization was unchanged at 76.7 percent in June, 2.2 percentage points above a year earlier but 3.7 percentage points below the 1972-2010 average.
In addition to aftershocks from the Japan disaster and the slump in housing, factory production was slowed by the overall economy, said Daniel J. Meckstroth, chief economist at the Manufacturers Alliance/MAPI.
“Manufacturing production got too far ahead of overall demand growth in the economy,” Meckstroth said.
He noted manufacturing production increased at a 7.2 percent annual rate in the first quarter of 2011 while GDP rose only 1.9 percent and that factory growth will lag an expected 1.9 percent expansion in second quarter GDP.