Industrial Production, Including Manufacturing, Falls in July

By at 16 August, 2019, 7:02 am

by Raymond J. Keating-

Assorted key economic data were released on August 15. And while labor productivity and retail sales were positive, industrial production (i.e., the real output of the manufacturing, mining, and electric and gas utilities) declined in July.

According to the latest report on industrial production from the Federal Reserve, industrial production declined by 0.2 percent in July. That included a 0.4 percent decline in manufacturing, and a decline of 1.8 percent for mining.

Courtesy of Chad Moutray, Chief Economist at NAM, via Twitter.

On mining, the Fed reported, “Hurricane Barry caused a sharp but temporary decline in oil extraction in the Gulf of Mexico.”

However, the Fed also explained: “Manufacturing output decreased 0.4 percent last month and has fallen more than 1-1/2 percent since December 2018.” Through the first seven months of 2019, manufacturing output – which is the biggest chunk of industrial production – was down in five months, and barely inched forward in another.

As we noted in the past, manufacturing production basically went into a recession from late 2014 to mid-2016. The first seven months of 2019 rank as the worst period since then.

Are we headed into or already in another manufacturing recession? One can make a case that’s the case given that manufacturing output fell in the first two quarters of 2019, and was down in July.

Is there a policy response that would help? Of course. Further rolling back costly and unnecessary regulations would be a big plus. But right now, the biggest policy problem is on the trade front, whereby tariffs and threats of more tariffs have raised costs and uncertainties, and reduced opportunities. Policymakers need to get back to advancing free trade, and that would be a clear positive for business investment, and for manufacturing.


Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

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