Output rises 0.5% in July as auto production surges 20% By Rex Nutting, MarketWatch WASHINGTON (MarketWatch) - Led by a resurgent auto sector, U.S. industrial output rose in July for the first time since October, the Federal Reserve reported Friday. The seasonally adjusted output of the nation's factories, mines and utilities increased 0.5% in July after a 0.4% decline in June. Output is down 13.1% in the past year. It was only the second increase in industrial production since the recession began in December 2007. Since then, output has fallen 14.6%. Industrial production is one of four monthly indicators used to judge whether the economy is growing or is in recession; the others are payrolls, incomes and business sales. Economists surveyed by MarketWatch were looking for a stronger increase of 0.7% in July. See Economic Calendar. Capacity utilization increased to 68.5% from a record-low 68.1% in June. Within manufacturing alone, the utilization rate rose to 65.4% from a record-low 64.7%. Utilization rates remain more than 12 percentage points below the long-run average, which means inflationary pressures stemming from bottlenecks are almost unknown. In a separate report, the Labor Department said the consumer price index was unchanged in July and was down 2.1% in the past year. Low capacity utilization rates also mean many industries won't need to invest in additional equipment when consumer demand revives. The gain in industrial output in July was entirely due to increased motor vehicle production, which jumped 20.1%. Motor vehicle assemblies increased to a seasonally adjusted annual rate of 5.87 million from 4.11 million in June. The boost in production had little to do with the government's cash-for-clunkers program; rather, it was a planned increase following severe production cutbacks as General Motors and Chrysler went through bankruptcy. Production levels are still below the pre-clunkers sales pace. Vehicle production has tumbled 32% in the past year. Excluding autos, industrial output fell 0.1%. Manufacturing output rose 1%, also the first increase since October and the largest increase since December 2006. Excluding autos, manufacturing output rose 0.2%. Output of high-technology industries rose 0.4% in July, but is down 20% in the past year. Output of machinery fell 0.5%. Mining output rose 0.8%, the first increase since November. Utility output fell 2.4%, on cooler-than-normal weather.

Source