Today’s Federal Reserve’s industrial production release showed that in June American manufacturing’s technical recession extended into its seventh straight month, with real output now down cumulatively since November. This slump is industry’s first since the Great Recession official ended, in 2009, and includes both the durable goods super-sector and its automotive complex – which had been domestic manufacturing’s recovery leader.
Moreover, the June year-on-year gain for manufacturing overall was the weakest since the harsh winter of 2013-14. The year-on-year durable goods rise was the worst since annual increases resumed as the current recovery gathered steam more than five years ago. Despite continued talk of a domestic manufacturing renaissance, industry’s after-inflation production is now only 2.68 percent higher than its pre-recession peak more than seven years ago.
Here are the manufacturing highlights of the Federal Reserve’s new release on June industrial production:
>According to the Fed, constant dollar manufacturing production rose in June by a meager 0.05 percent – its fourth straight monthly increase but too weak to prevent the sector from entering its seventh month of technical recession (defined as at least six months – two quarters – of cumulative real output decline).
>This technical recession encompasses durable goods and this sector’s automotive industry – which until now has helped lead domestic manufacturing out of its steep recessionary tailspin.
>Since November, 2014, inflation-adjusted manufacturing production has dropped 0.21 percent after inflation. Real durable goods output is down 0.72 percent during this period and, since last July, constant dollar automotive production is down 4.91 percent.
>Contributing to automotive troubles was a 3.67 percent June monthly production fall that was the biggest such decrease since the 7.25 percent plunge last August.
>Revisions to previous Fed manufacturing production readings were fractional and mixed. The initial May real monthly decline of 0.21 percent was revised up to a 0.03 percent gain. But April’s originally upwardly revised 0.13 percent improvement is now judged to have been a 0.12 percent increase.
>On a year-on-year basis, manufacturing’s 2.07 percent real production increase was lower than May’s 2.45 percent and the worst such performance since January, 2014’s 1.64 percent rise. That month’s poor performance was widely attributed to an unusually harsh winter. June’s annual real manufacturing output growth was also much lower than the 3.90 percent achieved from June, 2013 to June, 2014.
>Due largely to the automotive drop, durable goods production dipped in June by 0.09 percent in constant dollar terms from May’s levels. In May, monthly production expanded by 0.57 percent.
>Durable goods output was especially weak on a year-on-year basis in June, with its 1.51 percent real rise the worst performance since January, 2010 – when the sector first resumed year-on-year inflation-adjusted growth as the current economic recovery was getting underway.
>Non-durables’ real output increased by 0.22 percent between May and June, after dropping by 0.56 percent the previous month.
>On a year-on-year basis, inflation-adjusted non-durable goods output climbed by 2.70 percent – its weakest such increase of 2015 but much better than 2013-14’s 1.51 percent.
>The June Fed figures pushed after-inflation manufacturing output 2.68 percent higher than its level in December, 2007 – more than seven years ago, when the last recession began.
>Durable goods production is now up 9.52 percent in real terms, since then, and non-durables output is 5.20 percent lower than at its pre-recession peak in July, 2007.