Manufacturing Output Down in Two Most Recent Months

By at 16 July, 2022, 5:43 pm

by Raymond J. Keating – 

During times of high and volatile inflation, industrial production data are particularly valuable as the numbers are free from price distortions. That is, industrial production captures the actual output of the manufacturing, mining and utility sectors of our economy.

Unfortunately, the June numbers were not encouraging.

Total industrial production declined by 0.2 percent in June, and that included a decline of 0.5 percent in manufacturing production, which is the largest chunk of industrial production.

The most recent two months of industrial production data have been troubling. Total output was flat in May, and again, fell by 0.2 percent in June.

Meanwhile, manufacturing output declined by 0.5 percent in both May and June.

Source: Federal Reserve Bank of St. Louis, FRED

As for the other categories under industrial production, mining was up in June by 1.7 percent, after a gain of 1.2 percent in May; while utility output dropped by 1.4 percent in June after an increase of 1.9 percent in May.

While hoping that the declines in these last two months will prove temporary, with inflation raging and public policy pointed in an anti-entrepreneurship, anti-business, anti-investment, anti-growth direction, these manufacturing output numbers serve as yet another warning of a possible recession.

It must be kept in mind that there’s nothing inevitable about recession, or even inflation. It’s about getting the policies right to provide a sound foundation for economic growth and price stability.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest book is The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist.


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