(What’s Left of) Our Economy: New Fed Manufacturing Production Figures Produce Mixed Picture

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durable goods, Federal Reserve, industrial production, inflation-adjusted growth, manufacturing, non-durable goods, recession, recovery, {What's Left of) Our Economy

Domestic U.S. manufacturing grew on month in April in real terms for the third straight month, according to the Federal Reserve’s new industrial production figures. Moreover, April’s 0.47 percent sequential after-inflation production increase was the best such result since October’s 1.31 percent – which was boosted by a bounce-back effect from last fall’s hurricanes. Monthly constant dollar output gains were recorded for both durable goods (0.42 percent) and non-durable goods (0.52 percent).

Yet moderately negative revisions generated an annual April real growth rate for overall manufacturing (2.01 percent) that was the lowest since January’s 0.99 percent, and slightly more sluggish than the previous April-to-April’s 2.18 percent. Adjusted for inflation, domestic U.S. manufacturing output remains 3.31 percent smaller than at its peak before the last recession began – more than ten years ago.

Here are the manufacturing highlights of the Federal Reserve’s release today on April industrial production:

>The new April Federal Reserve industrial production figures showed mixed results for domestic manufacturing, with inflation-adjusted output expanding sequentially for the third straight months, but annual real growth showing some signs of slowing.

>Industry’s constant dollar output improved on month by 0.47 percent in April – the best such performance since a hurricane bounce-back effect helped spur a 1.31 percent sequential spurt last October.

>April’s real monthly production improvement was broad-based, including both the durable goods (0.42 percent) and non-durable goods (0.52 percent) super-sectors.

>Yet the latest revisions were moderately negative. March’s meager 0.07 percent monthly output rise was downgraded to 0.02 percent, February’s 1.51 percent jump is now judged to have been 1.40 percent, and January’s 0.37 percent sequential drop is now reported as a 0.59 percent decrease.

>Largely as a result, April’s year-on-year real manufacturing production increase was only 2.01 percent – the lowest since January’s 0.99 percent.

>Between the previous Aprils, constant dollar manufacturing output expanded by 2.18 percent.

>In addition, the new Fed figures reveal that, in price-adjusted terms, domestic manufacturing is still 3.31 percent smaller than at its pre-recession peak at the end of 2007 – more than ten years ago.

>More encouragingly, April’s monthly manufacturing production improvement was broad-based.

>For durable goods, the larger of manufacturing’s two super-sectors, real output advanced by 0.42 percent sequentially in April.

>Nonetheless, revisions were negative as well, with March’s previously reported 0.39 percent increase downgraded to 0.17 percent, February’s 1.84 percent increase to 1.59 percent, and January’s 0.25 percent dip to a 0.40 percent decrease.

>Durable goods’ year-on-year results were no better. April’s 1.94 percent annual production increase was the lowest inflation-adjusted figure since January’s 0.74 percent. It was also significantly worse than the 2.77 percent figure recorded between the previous Aprils.

>Durable goods real production is now 0.78 percent above the level it hit at the outset of the last recession, at the end of 2007. It rose slightly the following month, and is now 0.75 percent above that January, 2008 levels.

>Non-durable goods have turned in a somewhat better recent performance.

>In April, their price-adjusted output rose by 0.52 percent on month.

>Moreover, March’s previously reported 0.27 percent sequential real production decrease was revised up to a 0.13 percent decline, and February’s 1.16 percent increase was revised up to 1.20 percent. Only January’s results were downgraded – from a 0.50 percent monthly decrease to a 0.79 percent drop.

>On an annual basis, non-durables after-inflation output rose by 2.10 percent in April – a decided improvement from the 1.54 percent increase between the previous Aprils.

>Further, although the latest year-on-year non-durables’ real output increase is also the lowest since January’s (1.26 percent), the deceleration has been smaller than that in durable goods.

>Nonetheless, constant dollar non-durables output is now fully 8.13 percent below its pre-recession peak – hit in July, 2007.

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(What’s Left of) Our Economy: Puzzling New Glimpses into U.S. Manufacturing

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Bureau of Economic Analysis, Bureau of Labor Statistics, Commerce Department, durable goods, Labor Department, labor productivity, manufacturing, non-durable goods, productivity, real value-added, {What's Left of) Our Economy

Two important sets of economic statistics came out today that shed lots of new light on the health of American manufacturing. Unfortunately, little of it is especially encouraging. In fact, some of it’s pretty mystifying.

The Commerce Department’s Bureau of Economic Analysis issued its annual report on the growth rates of different sectors of the U.S. economy. The main manufacturing finding: Industry’s annual growth rate did pick up last year according to a measure called real value-added (which leads off the report, and which attempts to eliminate the double-counting of output that occurs when broader gauges fail to distinguish between final products on the one hand, and their parts, components, and other inputs on the other). Yet the acceleration from a 0.5 percent yearly expansion in 2016 to 2017’s 1.9 percent trailed that output increase of the economy as a whole – which improved from 1.5 percent to 2.3 percent. As a result, the economy became slightly more manufacturing light in 2017.

In addition, within manufacturing, growth leadership shifted dramatically. Whereas the non-durable goods super-sector outperformed its larger durable goods counterpart in 2016 (with the former’s real value-added improving year-on-year by 1.2 percent while the latter’s slipped by 0.2 percent), durable goods rebounded to a 3.4 percent annual growth rate in 2017 while non-durables’ real value-added inched up by just 0.1 percent.

The American economy’s overall growth leader in 2017 in real value-added terms? The mining sector, which jumped by 8.5 percent after plummeting by 13.3 percent the year before. The next fastest-growing industries were administrative and waste management services (4.9 percent), corporate management (4.6 percent), and information services (four percent even).

Today’s second data set (from the Labor Department’s Bureau of Labor Statistics) shows which sectors within manufacturing last year excelled in terms of labor productivity (the narrower of economists’ two main measures of efficiency), and which lagged and, once more, many of the results were surprising. (We already know that industry in toto had a dreary labor productivity year last year.) For instance, computer and computer peripheral equipment led the way last year, generating eleven percent more output per employees hour worked. But next came apparel knitting mills, at 10.5 percent, followed by agriculture, construction, and mining machinery at 10.4 percent, and cutlery and handtools at 9.4 percent.

The biggest productivity loser in 2017? Miscellaneous transportation equipment, where it nosedived by 11.5 percent. In ascending order, the next worst performers were electric lighting equipment (down 9.2 percent), sugar and confectionary products (down eight percent), and beverages (down 7.8 percent).

Other manufacturing sectors whose labor productivity worsened on year in 2017? Pharmaceuticals and medicine (down seven percent), metal-working machinery (which includes machine tools – and where labor productivity declined by 1.3 percent), communications equipment (down 2.2 percent), semiconductors (down 0.7 percent), motor vehicles (down 4.1 percent), and aerospace products and parts (down 3.1 percent).

And if you’re thinking that this list of productivity losers includes lots of so-called industries of the future, you’re of course right. Kudos also if you’ve noted that aerospace is the economy’s biggest trade surplus industry. It’s enough to instill a little humility in those of us who think we’re getting a handle on this gargantuan, complex American economy, or heighten for those who had some already.

(What’s Left of) Our Economy: New Fed Figures Show Manufacturing’s Solid Growth Continuing – but Revisions Depress the Baseline

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durable goods, Federal Reserve, Great Recession, industrial production, manufacturing, non-durable goods, recovery, {What's Left of) Our Economy

Incorporating revisions going back to 2015, the Federal Reserve’s new March industrial production figures showed that inflation-adjusted U.S. manufacturing output growth has been even weaker recently than previously reported slowed substantially.

Annual constant dollar production for 2015, 2016, and 2017 were downgraded by 1.1 percentage points, 0.4 percentage points, and 0.3 percentage points, respectively. Leading industry down was the durable goods super-sector, where annual price-adjusted production was judged worse during these years by 1.3 percentage points, 1.2 percentage points, and 0.5 percentage points, respectively.

One silver lining: Manufacturing’s overall poor recent performance has helped produce strong year-on-year after-inflation growth figures for 2018, including a 3.25 percent March read that was the best annual gain since June, 2012’s 3.73 percent.

The new figures dragged inflation-adjusted manufacturing output down to 3.27 percent below its pre-recession peak – achieved more than eleven years ago, at the end of 2007. This March’s constant-dollar sequential production gain was a meager 0.07 percent. Recent monthly revisions were positive for February but negative for January.

Here are the manufacturing highlights of the Federal Reserve’s release on March industrial production:

>The big story in today’s new Federal Reserve industrial production figures were the annual revisions, which revealed that U.S. domestic manufacturing’s growth in recent years has been even slower than reported.

>According to the Fed, after-inflation manufacturing output for 2015, 2016, and 2017 was lower by 1.1 percent points, 0.4 percentage points, and 0.3 percentage points than previously reported.

>The revisions were even worse for the manufacturing’s durable goods super-sector – which accounts for more than half of industry’s production. It’s real annual output was judged to be 1.3 percentage points, 1.2 percentage points, and 0.5 percentage points lower than previously reported during this period.

>The reduced 2017 constant dollar output figures in particular, however, have helped produce strong yearly production growth in manufacturing so far this year, as March’s 3.25 percent annual inflation-adjusted output growth the sector’s best such performance since June, 2012’s 3.73 percent.

>Between the previous Marches, constant-dollar manufacturing output rose by just 0.64 percent.

>Nonetheless, the negative revisions mean that price-adjusted U.S. manufacturing production is now 3.27 percent below the level it hit just before the last recession hit – more than eleven years ago, at the end of 2007. As of the Fed’s last pre-annual revision monthly production report (for February), industry was only 1.49 percent smaller in price-adjusted terms than at the recession’s onset.

>Despite this annual performance, after-inflation manufacturing output edged up by only 0.07 percent sequentially in March.

>February’s robust monthly real growth was revised up from 1.27 percent to 1.51 percent – its best such performance since July, 2009’s 1.61 percent – at the very beginning of the current recovery.

>Although its 2015-2017 was unimpressive, the durable goods sector has fared well this year, too.

>Its March monthly growth was a solid 0.39 percent, and February’s blistering 1.78 percent figure was revised up to 1.84 percent – the biggest such increase since May, 2010’s two percent.

>One recent blot on the durable goods’ 2018: January’s monthly output change was revised down for a second time – from a 0.18 percent decline to a 0.25 percent drop-off.

>Durable goods production has shone this year on an annual basis, too. The March 3.82 percent upsurge in price-adjusted terms was the strongest such performance since July, 2014’s 5.79 percent.

>Between the previous Marches, real durable goods production improved by only 1.23 percent.

>After inflation, durable goods production is now 1.20 percent above its December, 2007 pre-recession peak.

>Real production in the non-durable goods sector for the 2015-17 period as a whole was revised down, too, but not as significantly as in durables or manufacturing as a whole. Annual production for 2015 and 2017 by 0.8 percentage points and 0.1 percentage points, respectively. But real output was revised up by 0.4 percentage points for 2016. 

>In non-durables, a relatively poor 2017 has helped produce much better 2018 annual growth. March’s year-on-year output increased by 2.67 percent in real terms – its best such performance since June, 2010’s 2.98 percent. Between the previous Marches, inflation-adjusted non-durable goods production rose only fractionally.

>On a monthly basis, however, non-durable goods’ real output slipped by 0.27 percent. Yet February’s previously recorded 0.71 percent sequential improvement was upgraded to 1.16 percent – the best such performance since October’s 2.37 percent, which reflected a rebound from hurricane-related setbacks suffered by many key sectors highly concentrated near the Gulf of Mexico.

>Still, the non-durables super-sector continues to struggle to recover from the Great Recession. Its real output remains 8.45 percent below its pre-downturn peak, hit in July, 2007.

(What’s Left of) Our Economy: A Strong February for U.S. Manufacturing Production – but Big Revisions May be Coming

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automotive, durable goods, Federal Reserve, Great Recession, industrial production, inflation-adjusted growth, manufacturing, non-durable goods, recovery, {What's Left of) Our Economy

Thanks to an unexpectedly crowded Friday, I wasn’t able to put out a report on yesterday’s Federal Reserve real manufacturing output figures – for February. Which is really a shame, because they signaled a noteworthy reversal to the recent slowdown in manufacturing output. In addition, the American automotive sector – which had led domestic manufacturing’s strong early recovery from its deep recessionary slide – emerged from its latest technical recession.

Two important caveats, though: First, revisions weren’t great, to say the least, so part of February’s strong performance reflected a January that was even weaker than previously reported. Second, next week, the Fed will be putting out its latest annual revisions, which will give us entirely new numbers dating back to 2016. And sometimes these updated figures change the picture significantly.

But now to the manufacturing highlights of yesterday’s intriguing good news/less good news Federal Reserve industrial production report:

>According to the Federal Reserve, after-inflation U.S. manufacturing output jumped by 1.27 perceet month-to-month in February – its best such performance since October’s 1.29 percent, which was boosted by a bounceback effect from last fall’s hurricanes. Taking October out of the picture, the February monthly rise was the biggest since last April’s 1.37 percent.

>At the same time, January’s meager 0.08 percent sequential uptick was downgraded to a 0.18 percent dip, and although December’s downwardly revised monthly dip is now judged to have been a 0.04 percent advance, November and October growth figures were lowered as well.

>Year-on-year, manufacturing grew in February by 2.57 percent – the fastest annual pace since July, 2014’s 2.82 percent. By contrast, between the previous Februarys, manufacturing’s price-adjusted output increased by only 1.13 percent.

>Due to the monthly revisions, full-year 2017’s real manufacturing output growth fell to 2.33 percent. But that still resulted in industry’s best year by this measure since 2012’s 2.58 percent.

>Moreover, February’s monthly growth was torrid enough to bring domestic industry to within 1.49 percent of its last constant dollar production peak – hit at the end of 2007, on the eve of the Great Recession.

>Manufacturing’s February performance was led by the durable goods super-sector, whose after-inflation production advanced by 1.78 percent on month. This growth was the fastest since February, 2014’s 1.80 percent, which was helped by a harsh winter rebound effect.

>Yet January’s sequential production change number for durable goods received a significant downgrade, too – from a 0.15 percent increase to a 0.38 percent decrease. The cumulative December and November revisions were slightly negative as well.

>Due largely to the downward January revisions, the month’s reported annual durable goods manufacturing increase was reduced from 2.47 percent to 1.74 percent – the lowest such figure since last August’s 0.95 percent.

​>But February’s annual durable goods real production increase of 3.46 percent was the best monthly performance since January, 2015’s 3.50 percent – which also stemmed partly from a winter weather bounceback.

>The downward December revisions, moreover, reduced durable goods’ full-year, 2017 inflation-adjusted growth to 2.41 percent – a figure that is still a post-2014 (2.72 percent) high.

>For the smaller non-durable goods super-sector, constant dollar production rose by 0.71 percent on month in February– its best such growth since the 2.34 percent burst in hurricane-affected October.

>Omitting the October performance still shows that February’s after-inflation non-durable goods growth was its strongest since last April’s 0.96 percent.

>Further, in the non-durables sector, revisions were slightly positive.

>On a year-on-year basis, real non-durable goods output improved by 2.18 percent in February. And for full-year, 2017, the positive monthly revisions pushed after-inflation output production up to 2.25 percent – the best such result since 2004’s 3.95 percent.

>The star February performer in manufacturing, was the automotive sector – whose sequential real output shot up by 3.88 percent, to an all-time high.

>That monthly performance was automotive’s best since last April’s 4.16 percent growth jump, and pulled the sector out of a real output technical recession that dates from that month.

>Interestingly, though, automotive’s initially reported 0.58 percent January sequential real output advance was revised down to a 0.22 percent drop, and December’s initially reported 1.13 percent inflation-adjusted production improvement was reduced to a 0.88 percent increase.

(What’s Left of) Our Economy: For America’s Steel-Makers, No Good Deed Goes Unpunished

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aluminum, American Economic Review, durable goods, inflation-adjusted output, Jobs, manufacturing, Michael Mandel, multifactor productivity, productivity, steel, tariffs, The Economist, Trade, Trump, {What's Left of) Our Economy

One of the strangest aspects of the debate over the new Trump tariffs is the way analysts and reporters and pundits are now handling the issue of productivity in the American steel industry, which along with aluminum will receive the benefit of these levies.

Usually, industries like steel that win trade protection are described as economic losers – they supposedly need this government crutch because they’ve grown fat and lazy, or technologically obsolete, and as a result have lost whatever ability they’ve had to meet the challenge of global competition. Here’s a typical allegation along these lines made in 2002 by the globalization and free trade cheering Economist magazine – when President George W. Bush imposed tariffs on U.S. steel imports. The charge has been echoed much more recently by economist Michael Mandel.

Nowadays, though, tariff opponents have come up with a new twist: American steel-makers in particular don’t need protection precisely because they’ve become highly competitive. According to this perspective, the steel protectionists inside the outside the White House are overlooking how the major steel job losses they’re obsessing about have resulted overwhelmingly not from predatory foreign competition, but because steel companies have become so efficient that they can produce much more of the metal with a much smaller workforce.

There’s no doubt that the U.S. steel industry has dramatically boosted its competitiveness by introducing new technology and other forms of knowhow into its factories. The authors of the above Economist editorial clearly didn’t know about findings, published in the prestigious American Economic Review, that over the roughly 30 years preceding their leader, the sector’s “output per worker grew by a factor of five, while total factor productivity (TFP) increased by 38 percent. This [made] the steel sector one of the fastest growing of the manufacturing industries over the last three decades, behind only the computer software and equipment industries.”

Moreover, because virtually no American steel firms supply the domestic market with offshored production, virtually none of the labor productivity increase cited above has stemmed from the misleading upward bias to recorded labor productivity figures created by this practice.

But 2002 was then. What about now? Is Mandel right about steel as a latter day productivity growth laggard? Not according to data from the U.S. Bureau of Labor Statistics, which compiles and publishes the productivity data for the government. Its figures show that the American primary metals sector, which includes steel and aluminum, increased its multi-factor productivity by 5.52 percent between 2008 (when the last recession took hold) and 2015 (the latest figures).

Manufacturing overall, by comparison, saw its productivity actually worsen by this measure – considered the most accurate gauge of an admittedly elusive performance indicator – by five percent during this period. Moreover, durable goods manufacturing – the industrial super-sector containing primary metals – saw its multi-factor productivity shrink by 1.28 percent between 2008 and 2015.

So The Economist and Mandel plainly have given steel a wholly unjustified bad productivity rap. But does that mean that those who have recognized steel’s outstanding recent productivity growth are right to argue that the resulting job loss in no way warrants tariffs? Not exactly.

For even though steel and other primary metals have been productivity growth leaders, they’ve been laggards not only in job creation, but in output. Indeed, during that 2008-15 period, primary metals’ inflation-adjusted production sank by more than three times faster (15.98 percent) as overall manufacturing output (5.22 percent). The output gap was even wider between steel and durable goods in toto (-1.28 percent).

A highly productive industry facing a vast import tide that’s been shrinking in constant dollar terms doesn’t prove definitively that trade is central to steel’s problems. But it’s awfully suggestive – indicating in the process that, despite its good productivity deed, the U.S. steel industry is nonetheless being punished.

(What’s Left of) Our Economy: Important New Backward Steps Revealed for U.S. Manufacturing Output

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automotive, durable goods, Federal Reserve, Great Recession, industrial production, inflation-adjusted growth, manufacturing, non-durable goods, recovery, {What's Left of) Our Economy

I somehow overlooked the release yesterday of the January industrial production figures, but that’s no reflection on the results’ importance. For they not only revealed that U.S. inflation-adjusted manufacturing output growth has ground to a near halt for the last two months, and has slowed markedly after rebounding strongly after last autumn’s hurricanes. They showed that this weak performance, along with negative revisions, pushed such production farther below its pre-recession peak. Here are the manufacturing highlights of yesterday’s Federal Reserve report:

>According to the Federal Reserve, real sequential growth in U.S. manufacturing in January was a mere 0.08 percent. Combined with a December figure now revised from similar negligible growth to a slight dip, and other negative revisions, domestic industry’s expansion has now slowed to a near-standstill. Moreover, the impressive rebound from last autumn’s hurricane-related setbacks has now petered out.

>December’s manufacturing output figure was downgraded from a 0.08 percent monthly increase to a 0.02 percent contraction. November’s 0.31 percent sequential growth is now judged to be 0.25 percent, and October’s monthly post-hurricane 1.50 percent bounce-back has been reduced to 1.37 percent growth.

>As a result, whereas last month’s industrial production report, reported American domestic manufacturing as 2.25 percent smaller in price-adjusted terms than at its pre-recession peak (reached in December, 2007), it’s now 2.43 percent below that level.

>Constant dollar output in the durable goods super-sector of manufacturing advanced by 0.15 percent on month in January – meaning that its growth has slowed for four straight months. Revisions here were also negative.

>December’s real durable goods production improvement was revised down from 0.27 percent to 0.23 percent, November’s from 0.43 percent to 0.41 percent, and October’s from 0.54 percent to 0.49 percent.

>A similar story has unfolded for the non-durable goods super-sector. Its month-to-month real output was up fractionally in January, and recent months’ revisions were downgrades.

>December’s 0.12 percent monthly after-inflation output dip is now judged to be a 0.29 percent decline, November’s 0.17 percent increase is now estimated at 0.08 percent, and October’s post-hurricane rebound has been revised down from 2.57 percent to 2.34 percent. (Non-durables’ output was most greatly affected by the hurricanes.)

>Year-on-year, manufacturing’s price-adjusted January growth of 2.03 percent was its worst such performance since September’s (hurricane-affected) 1.37 percent.

>In addition, the December monthly downgrade brought the full-year 2017 real growth rate down from 2.64 percent (its best since 2011’s 2.71 percent) to 2.38 percent (now only the best since 2012’s 2.58 percent).

>Durable goods’ yearly January growth was 2.47 percent – its slowest such growth since September’s 2.41 percent.

>Further, its December downward revision also depressed its full-year 2017 growth from 2.65 percent to 2.59 percent. That’s only a post-2014 (2.72 percent) high.

>In non-durable goods, January’s year-on-year growth was 1.56 percent – its worst such performance since September’s hurricane-impacted 0.13 percent.

>For full-year, 2017, its growth is now pegged at 2.14 percent, not the 2.64 percent reported last month.

>That yearly performance is still the best for non-durables since 2004’s 3.95 percent.

>In the automotive sector, which led manufacturing’s strong initial recovery from its deep recessionary dive, real production rose by 0.58 percent sequentially in January. But that strong figure was just over half December’s 1.13 percent.

>Worse, the January figures mean that real automotive output remained in technical recession – that is, six or more months of cumulative decline. The sector is now 0.27 percent smaller than in April, 2017.

(What’s Left of) Our Economy: New Figures Report a Strong 2017 that Ended Weakly for U.S. Manufacturing

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automotive, autos, durable goods, Federal Reserve, inflation-adjusted growth, manufacturing, non-durable goods, recovery, {What's Left of) Our Economy

The Federal Reserve’s new industrial production figures for December revealed that inflation-adjusted U.S. manufacturing output growth has slowed substantially. Its fractional (0.08 percent) monthly increase represented its worst sequential performance since August’s 0.14 percent dip. December’s near-standstill, moreover, followed a November upwardly revised 0.31 percent improvement that was much slower than October’s upwardly revised hurricane bounceback growth (1.50 percent). In addition, the December weakness was widespread, with real sequential growth in the durable goods supersector decelerating from November levels and such output decreasing in non-durables.

Nonetheless, domestic manufacturing’s full-year 2017 price-adjusted growth of 2.64 percent was its best annual increase since the 2.71 percent registered in 2011. For non-durable goods, its 2.64 percent annual real production advance was its best since 2005’s 3.95 percent. Inflation-adjusted production in the automotive sector rose on-month by 2.03 percent – its best rate since August’s 3.47 percent. Yet combined motor vehicles and parts output after inflation remained in a technical recession, standing 0.16 percent lower in December than in April. The December figures show that, adjusted for inflation, American manufacturing remains 2.25 percent smaller than when the last recession began, a decade ago..

Here are the manufacturing highlights of the Federal Reserve’s release on December industrial production:

>New Federal Reserve industrial production figures showed that a U.S. manufacturing production growth slowdown – which began in November following October’s hurricane bounceback – extended into a second month in December.

>After-inflation manufacturing output rose on month by a bare 0.08 in December, the worst such performance since August’s 0.14 percent sequential dip.

>Real monthly production for November was revised up from 0.22 percent to 0.31 percent, but that figure still represented a major decrease from the 1.50 percent constant dollar sequential growth in October – when industry mounted a comeback from early autumn’s hurricanes. The October figure was also revised up (for the second time) from 1.45 percent.

>The softness in the December manufacturing output figures was widespread. In the durable goods supersector, real production increased sequentially by a respectable 0.27 percent. But that performance was down from November’s 0.43 percent and October’s 0.54 percent.

>Constant dollar output in non-durable goods – the supersector most heavily affected by the hurricanse – fell sequentially in December by 0.12 percent. Its monthly price-adjusted growth in October and November was 2.57 percent and 0.17 percent, respectively.

>Viewed from a year-on-year perspective, manufacturing’s performance was much better. It’s full-year 2017 inflation-adjusted production increase of 2.64 percent was the best since 2011’s 2.71 percent – which was achieved much earlier in the current economic recovery.

>Durable goods’ growth of 2.65 percent in real terms in 2017 was its fastest rate since 2012’s 4.26 percent.

>For non-durable goods, its identical 2.64 percent real year production rise was its best such performance since 2005’s 3.95 percent.

>December was the best month for automotive output – which increased after inflation sequentially by 2.03 percent – since August’s 3.47 percent.

>But this crucial sector remained in technical recession, as its December inflation-adjusted production down by 0.16 percent since April.

>As of the December figures, after adjusting for price changes, American domestic manufacturing still remained 2.25 percent smaller than when the last recession broke out – ten years ago.

(What’s Left of) Our Economy: August US Manufacturing Output Joins List of Harvey’s Victims

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automotive, chemicals, durable goods, energy, Federal Reserve, Great Recession, Gulf coast, Hurricane Harvey, industrial production, inflation-adjusted output, Louisiana, manufacturing, natural gas, non-durable goods, oil, recovery, Texas, {What's Left of) Our Economy

Hurricane Harvey’s devastation of the energy-rich Texas and Louisiana Gulf coasts slammed into America’s after-inflation manufacturing output in August as well, as the Federal Reserve’s new industrial production figures showed real manufacturing output down 0.26 percent on month due mainly to fall-offs in chemical industries that use oil and gas as feedstocks. As a result, constant dollar non-durable goods output fell in August by its greatest monthly total (0.86 percent) since January, 2014 (1.20 percent), and overall chemicals production sank by its greatest sequential amount (2.15 percent) since recessionary December, 2008 (4.85 percent).

After-inflation production was off by the greatest monthly totals since that time in basic chemicals; organic chemicals; and especially in resins, synthetic rubber, and artificial and synthetic fibers and filaments. The most affected industry was fibers and filaments, where price-adjusted output plummeted by 9.10 percent – the worst such performance in this volatile sector since November, 2008 (11.25 percent).

Among the bright spots in the August manufacturing production figures: The automotive industry saw its first real output improvement in four months (2.16 percent), and revisions for manufacturing were positive. All the same, America’s real industrial production levels remain 4.03 percent lower than their pre-recession peak – more than nine years ago in December, 2007.

Here are the manufacturing highlights of the Federal Reserve’s new release on August industrial production:

>Hurricane Harvey’s devastation of the energy-rich Texas and Louisiana Gulf coasts devastated enough of the nation’s chemicals industry to create a 0.26 percent monthly sequential drop in real manufacturing output in August.

>The decline was heavily concentrated in chemicals, and especially in sectors highly dependent on Gulf oil and gas as feedstocks.

>The Harvey effects could first be seen in the non-durable goods sector in which chemicals industries are found. Its August inflation-adjusted production decreased by 0.86 percent – the worst sequential performance since January, 2014’s 1.20 percent fall-off.

>The enormous chemicals industry suffered as well, with price-adjusted production down 2.15 percent on month in August – its biggest such decline since December, 2008’s 4.85 percent, at the nadir of the Great Recession.

>Similar multi-year worsts were registered in basic chemicals, organic chemicals, and the resin, synthetic rubber, and artificial and synthetic fibers and filaments grouping. The latter two segments – which often displays volatile production patterns – saw real output dive in August on month by 9.10 percent, the greatest drop since November, 2008’s 11.25 percent.

>The hit to oil refineries so far has been more modest – their constant dollar output was off on month by just 1.93 percent. Nonetheless, this represented the biggest such decline since June, 2014’s 2.06 percent.

>Better news in August was generated by the U.S. automotive sector. Since leading domestic manufacturing out of its deep recessionary slump during most of the recovery, combined vehicle and parts production has tailed off recently – including a July sequential production plunge that has now been revised down (to 4.16 percent) to the worst such performance since June, 2015 (4.48 percent).

>In fact, combined vehicle and parts production had worsened sequentially for three straight months.

>But in August, after-inflation automotive output advanced by 2.16 percent sequentially, and helped the durable goods super-sector grow by 0.30 percent on month.

>In addition, the Fed’s real manufacturing output revisions were positive, including an upgrade for July from a 0.06 percent dip to a 0.04 percent rise.

>In fact, largely because real manufacturing output was so weak in 2016, August’s fair results were enough to push price-adjusted year-on-year output up to 1.63 percent from July’s 1.49 percent.

>Nonetheless, the August Fed figures make clear that U.S. domestic manufacturing has still not full recovered from the Great Recession. In terms of real output, it remains 4.03 percent smaller than its pre-recession high – reached more than nine years ago, in December, 2007.

(What’s Left of) Our Economy: New Ups & Downs for Manufacturing Production, but Recovery Still Incomplete

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automotive, durable goods, Federal Reserve, Great Recession, industrial production, inflation-adjusted output, manufacturing, non-durable goods, recovery, {What's Left of) Our Economy

Domestic manufacturing has entered a period of output volatility, today’s new Federal Reserve figures indicate. Inflation-adjusted production in May – the latest data – fell sequentially (by 0.39 percent) for the second time in three months, following a six-month streak of sequential improvements. But April’s big rise was upgraded from one percent to 1.16 percent – the strongest such showing since May, 2010’s 1.49 percent, early in the current recovery. At the same time, March’s already downgraded 0.41 percent real monthly output decrease was lowered again, to a 0.75 percent slide. That was the worst such retreat since winter-affected January, 2014’s 1.09 percent.

Automotive revisions figured prominently in these upgrades and downgrades, with April’s initially reported five percent constant dollar monthly production surge now judged to be 4.12 percent. In May, after-inflation output for the sector, which has led generally led manufacturing’s rebound from the Great Recession, tumbled 2.02 percent on month.  

Durable goods – manufacturing’s biggest super-sector – was most seriously affected by the auto volatility.  Its April monthly real output was boosted to an upwardly revised 1.20 percent – the fastest such pace since February, 2014’s winter-affected 1.80 percent.  But its May after-inflation on-month production was dragged down to a 0.84 percent fall – the worst since the 0.99 percent decrease resulting partly from January, 2014’s similarly cold weather.    

Non-durables’ production performance has been steadier, with May’s 0.10 percent on-month real gain its fourth such improvement in five months. Moreover, April’s sequential inflation-adjusted production growth was upgraded from an already strong 0.98 percent to 1.10 percent – it best such performance since October, 2008’s 2.15 percent. And non-durables’ annual real output increase of 1.53 percent was its best year-on-year rise since February, 2016’s 1.55 percent.

All the same, the new figures and volatility left domestic manufacturing’s price-adjusted output 3.99 percent less than at its pre-recession peak, more than nine years ago.

Here are the manufacturing highlights of the Federal Reserve’s new release on May industrial production:

>U.S. real manufacturing output fell in May sequentially for the second time in three months. But the 0.39 percent decline – which followed six straight months of sequential growth – was modest compared with many of the March and April revisions, which could be starting a period of new volatility.

>April’s strong initially reported inflation-adjusted output rise of one percent was revised up to 1.16 percent. That was the best such performance since May, 2010’s 1.49 percent, when the manufacturing recovery from the Great Recession was still gathering steam.

>But March’s already downgraded 0.41 percent monthly real production decline was cut further, to 0.75 percent. That was domestic manufacturing’s worst such growth showing since the 1.09 percent fall-off in January 2014, which was affected by harsh winter weather.

>February’s last (downwardly revised) 0.27 percent monthly after-inflation output increase was revised back up to 0.38 percent.

>Some these swings can be traced to the automotive sector, which has led manufacturing’s real growth for most of the current economic recovery.

>April on-month price-adjusted auto production was initially reported to have advanced by five percent – its best growth since July, 2015’s 7.84 percent. Leading the way was a reported 8.04 percent surge in real vehicle output, also the best since July, 2015 (12.38 percent).

>The new April numbers: 4.12 percent and 6.76 percent, respectively. And in May, constant-dollar production fell by 2.02 percent.

>Automotive’s ups and downs most profoundly affected production of durable goods – manufacturing’s largest super-sector.

>The poor May automotive performance contributed to the 0.84 percent sequential durable goods real production shrinkage that month – the worst such decline since winter-affected January, 2014’s 0.99 percent.

>But the initially reported 1.01 April monthly durables production advance is now estimated at 1.20 percent – the super-sector’s fastest growth since the winter-affected 1.80 percent in February, 2014. Combined with the lower automotive results, this development indicated some relative strength outside automotive.  

>And thanks to the strong and upwardly revised April monthly figures, durable goods year-on-year after-inflation production gain that month was upgraded from 2.03 percent to 2.22 percent – still the best such increase since January, 2015’s 3.15 percent, which was also affected by harsh winter weather.

>In April, however, the annual durable goods real output improvement sank to 1.66 percent.

>The new Fed figures show that real output in non-durable goods has been steadier than in durables, but April was a standout nonetheless. Their robust sequential output growth of 0.98 percent was revised up to 1.10 percent – which produced the best monthly result since the 2.15 percent recorded in October, 2008 – even before the Great Recession broke out.

>And non-durables followed up by eaking out 0.10 percent monthly inflation-adjusted production growth in May – their fourth such advance in the last five months.

>Further, the 1.53 percent May non-durables annual constant dollar output increase was its best yearly result since February, 2016’s 1.55 percent.

>Yet not even this recent volatility could turn domestic manufacturing into a recovery-era economic winner. The overall sector is still 3.99 percent smaller in real terms than at its pre-recession peak – more than nine years ago, in December, 2007.

>Durable goods real output is up – but by only 0.13 percent – during this time, while non-durables real output is down 9.08 percent from its pre-recession peak, hit in July, 2007.

(What’s Left of) Our Economy: U.S. Manufacturing Growth Regained Momentum in April

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automotive, durable goods, Federal Reserve, industrial production, inflation-adjusted growth, manufacturing, non-durable goods, recession, {What's Left of) Our Economy

Today’s new Federal Reserve figures showed that real U.S. manufacturing production rebounded in April after a March decline with its best monthly gain (one percent) since winter-affected February, 2014’s 1.11 percent. April’s annual increase (1.91 percent), moreover, was the strongest since January, 2015’s 2.58 percent – which was also impacted by harsh weather. Leading the April industrial comeback was the automotive sector, which saw its constant dollar output jump five percent – the biggest monthly improvement since July, 2015’s 7.84 percent. Vehicles were the standout within automotive, as after inflation production soared by 8.02 percent on-month in April, their best month since a 12.38 percent increase also registered in July, 2015.

Thanks largely to the automotive sector, price-adjusted output in the durable goods super-sector increased by 1.01 percent. That rise was its best since March, 2014 (1.03 percent). Largely as a result, the yearly inflation-adjusted durables output increase of 2.03 percent was its best such performance since January, 2015’s 3.15 percent – which was weather-related as well. But manufacturing’s solid April improvement was broad-based, as indicated by the 0.98 percent monthly gain in non-durable goods production – its best since November, 2014 (1.03 percent). Moreover, the annual inflation-adjusted non-durables production improvement of 1.73 percent was its best such improvement since October, 2015 (1.81 percent).

Revisions to March and February manufacturing output numbers were slightly negative, however, and the sector’s after-inflation output is still down by 3.58 percent since the onset of the last recession – more than nine years ago.

Here are the manufacturing highlights of the Federal Reserve’s new release on April industrial production:

>U.S. real manufacturing output regained its momentum in April following a March drop, with real output growing sequentially (by one percent) for the seventh time in the last eight months.

>The gain was industry’s best since the 1.11 percent on-month increase in February, 2014 – when the sector was recovering from a harsh winter.

>Largely as a result, after-inflation manufacturing production in April also recorded its best annual increase (1.91 percent) since January, 2015’s 2.58 percent – which also partly stemmed from a recovery from a slowdown due to unusually cold weather.

>Leading manufacturing’s April surge was the biggest (five percent) sequential increase in automotive production since July, 2015 (7.84 percent). And leading automotive was the vehicles sector, where constant dollar production jumped on-month by 8.02 percent – also the biggest such advance since July, 2015 (12.38 percent).

>Thanks largely to automotive’s performance, the durable goods super-sector saw its monthly price-adjusted production grow by 1.01 percent – the fastest pace registered since March, 2014’s 1.03 percent.

>In addition, durable goods’ annual April real advance of 2.03 percent was its best such performance since the weather-affected 3.15 percent improvement in January, 2015.

>But April’s sequential manufacturing advance extended far beyond the durables super-sector, as its non-durables counterpart boosted its monthly real production last month by 0.98 percent. That growth rate was its best since November, 2014’s 1.03 percent.

>Non-durables’ real annual output gain of 1.77 percent was its fastest since October, 2015’s 1.i1 percent.

>The only blemishes in these April Fed manufacturing data were the revisions. March’s previously reported 0.38 percent monthly real production decline was downgraded to a 0.41 percent falloff and February’s already downwardly revised 0.35 percent sequential growth is now reported as a 0.27 percent rise. The downwardly revised January on-month growth figure of 0.39 percent was upgraded to 0.40 percent.

>Despite April’s strong monthly results, American domestic manufacturing is still 3.58 percent smaller in real terms than at the beginning of the last recession – more than nine years ago, at the end of 2007.