Industrial Production Rises But It is Far Below the Pre-Covid Trend

Mish

Industrial production rose 5.4% in June but the trendlines are far away.

The Fed's Industrial Production and Capacity Utilization report shows total industrial production rose 5.4 percent in June after increasing 1.4 percent in May. 

June Key Points

  • Industrial Production rose 5.4% 
  • Manufacturing rose 7.2%
  • Utilities rose 4.2%
  • Capacity Utilization rose from 65.1% to 68.6%
  • Motor Vehicles and Parts rose 105.0%

Even with the two-month bounce, IP is  10.9 percent below its pre-pandemic February level. 

For the second quarter as a whole, the index fell 42.6 percent at an annual rate, its largest quarterly decrease since the industrial sector retrenched after World War II. 

Mish

Comments (5)
No. 1-3
Mish
Mish

Editor

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KansasDog
KansasDog

And there's your V or most of it. Most manufacturers in the KC area have been ramping up as well as auto parts stores. Some of them go silent here and are suspected covid infections. I have friends in both and hear about it and see help wanted signs that continuously run disappear. You don't hear anything on the news about it.

jfpersona1
jfpersona1

Looking at that graph, back in the great recession time frame, the trendlines dropped but not as steeply as today. Similarly, the trend back to 'normal' (not the previous high) was not very steep and took about 2-3 years.

The current drop looks sharp and deep. The current partial recovery so far looks quick and steep. And that's where we are...no idea whether the trend will continue quite steeply up or if it will sputter out and flatten at a significantly lower level than pre-pandemic hit.

My own experience (I work in manufacturing) is that I am as busy as I have ever been. The company I work for has taken the pandemic seriously from the start (work from home where possible, converting work/gathering areas to enhance distancing, enforcing distancing, more recently - providing masks and enforcing rosters for contact tracing, etc.). Although they have not been unscathed by some cases, they also have not had large outbreaks.

Just an anecdote - but one that shows that it is possible for organizations to operate in this environment without completely losing it.


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