ECONOMIC UPDATE: Industrial Production, Including Manufacturing, Ticks Up in August

By at 18 September, 2019, 12:50 pm

by Raymond J. Keating-

For much of 2019, industrial production (i.e., the real output of the manufacturing, mining, and electric and gas utilities) has not fared too well. That’s why growth in August, as reported by the Federal Reserve, is most welcome.

Specifically, industrial production grew by 0.6 percent in August. That included manufacturing output – the biggest chunk of industrial production – increasing by 0.5 percent and mining being up by 1.4 percent (offsetting losses in July due to Hurricane Barry).

The sobering numbers, however, emerge when looking at growth – or the lack thereof – over the past year. Form August 2018 to August 2019, industrial production grew by a mere 0.4 percent, with manufacturing suffering a decline of 0.4 percent. As noted in the two following charts, industrial and manufacturing production were on a general decline from the start of this year to July.

Source: The Federal Reserve Bank of St. Louis, FRED

Source: The Federal Reserve Bank of St. Louis, FRED

However, mining was up a by a robust 5.1 percent.

Source: The Federal Reserve Bank of St. Louis, FRED

The hope, of course, is that the August turn up in industrial production will be the start of a growth stretch. As the impact of public policy, tax and regulatory relief achieved during the first two years of the Trump administration still matter, and are clear positives. But misguided and costly trade policies, along with government spending ramping up, are working against growth. In addition, uncertainty swirls around monetary policy as well as the political outlook heading into presidential and congressional elections in 2020.

As always, the industrial sector, along with the rest of our economy, would benefit from advancing a clear policy agenda of lower taxes, lighter regulation, free trade, restrained government spending, and monetary policy focused on price stability.

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

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