Macro Flash Report

Industrial & Manufacturing Production

Takeaway:

July’s Industrial Production drops sharply amid Hurricane Beryl disruption – capacity utilization also hits three-month low. Going forward, total capacity remains at an all-time high, but it will take some time for the manufacturing sector to feel the benefits of upcoming rate cuts.

Industrial Production (YoY% red/green)

In July, Industrial Production declined by -0.6%, the most in six months, erasing the revised lower 0.3% in June and a sharper contraction than the market expected -0.3%, printing to 102.9.

• Year-over-year, production declined -0.2%, the first drop in three months, following a 1% increase in June.

Capacity Utilization also fell, ticking down to 77.8%, marking a three-month low, from a downwardly revised 78.4% in June and below forecasts of 78.5%.

Manufacturing (SIC) Production, which accounts for 75% of industrial production, decreased by -0.3%, the first decline since April and down from the revised flat reading in June.

• Annually, however, production grew by 1%, albeit a slowdown from June’s revised lower 0.6% increase.
• These figures align with the softness seen in other manufacturing data, highlighting the sectors struggle with prolonged high interest rates.

*It is important to note that a lot of this decline has been attributed to the disruptive impact from Hurricane Beryl.