Industrial production numbers from the Fed, calculation and chart by Mish.

Please consider the Fed’s Industrial Production and Capacity Utilization report for August 2023.

Industrial production increased 0.4 percent in August, and manufacturing output inched up 0.1 percent. The August reading for manufacturing was held back by a drop of 5 percent in the output of motor vehicles and parts; factory output elsewhere rose 0.6 percent. The index for mining moved up 1.4 percent, and the index for utilities climbed 0.9 percent. At 103.5 percent of its 2017 average, total industrial production in August was 0.2 percent above its year-earlier level. Capacity utilization moved up to 79.7 percent in August, in line with its long-run (1972–2022) average.

A Word About Revisions

Once again we see more negative revisions, no surprise in this corner.

Last month the Fed reported IP rose 1.0 percent in July. This month the Fed says July rose 0.7 percent.

Last month I reported Industrial Production Jumps 1 Percent From Negative Revisions, Autos Lead the Way

This month we see the 1.0 percent was really 0.7 percent. Next month we will have a much better clue what last month and this month are.

Motor Vehicles and Parts Last 3 Months

• June: -3.9
• July: +5.1
• August: -5.0

The month-over-month numbers are interesting. With a then pending strike, now underway, the big three manufacturers should have been attempting to get as much production under their belts as possible. Instead there was a 5.1 percent rise in July followed by a 5.0 percent decline in August.

Have seasonal adjustments gone haywire? And what’s with that 10.4 percent jump in April?

Are the numbers this volatile or is it the Fed’s measurement that’s volatile?

Industrial Production Index

Industrial production numbers from the Fed, chart by Mish.

For all the volatility in motor vehicles and durable good, the overall IP index is quite stable. It’s gone nowhere for years but in interesting ways.

Industrial Production Index Since 1972

Industrial production numbers from the Fed, chart by Mish.

The US manufacturing IP index peaked at 106.4 in December of 2007 at the onset of the Great Recession and never recovered.

Year-over-year analysis is a good way to see where things have been going.

Industrial Production Percent Change Year-Over-Year

Industrial production numbers from the Fed, calculation and chart by Mish.

Year-Over-Year Changes

• IP: +0.2 Percent
• Manufacturing: -0.7 Percent
• Durable Goods Manufacturing: -1.7 Percent
• Motor Vehicles and Parts: +5.9 percent
• Aircraft and Parts: +11.0 Percent

Motor vehicles has been seriously impacted by lack of parts, notably chips, and more recently a push for EVs that customers don’t seem to want.

Perhaps EVs have contributed a bit to month-over-month volatility.

More About EVs

1. What Do MishTalk Readers Think About “Electric Vehicles for Everyone?”
2. Rental Car EV Pains, No One in their Right Mind Wants Them Now
3. The Shocking Truth About Biden’s Proposed Energy Fuel Standards
4. Biden’s Green Energy Inflation Reduction Act Needs a Big Bailout Already

EVs are coming, like it or not. For those who have a charger in their home and seldom travel far, EVs make good sense.

EVs make little to no sense for vacationers, see link #2 above.

And for everyone, EVs are not going to do a damn thing for the environment. A Biden administration report makes that determination.

Buried deep on Page 56,342 of volume 88 of the Federal Register, the agency makes this concession about its latest proposed rules: “Net benefits for passenger cars remain negative across alternatives.” In plain English, this means that mandating ever-more-stringent fuel economy for passenger cars will harm society.

For discussion, please see #3 above.

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