(What’s Left of) Our Economy: The New Fed Manufacturing Data Featured a Strong Headline Number and Soft Internals

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automotive, Federal Reserve, industrial production, inflation-adjusted output, manufacturing, {What's Left of) Our Economy

Since I needed to finish prepping yesterday for a big trade policy debate held in Washington, D.C. last night (hopefully there will be a video to post soon), I couldn’t get out my analysis of the manufacturing highlights of the June industrial production data released by the Federal Reserve yesterday. So here’s an abbreviated version, and the big takeaway is as follows:

The June monthly real manufacturing output production rebound reported by the Fed masked two disturbing developments. First, just as the May sequential real manufacturing output falloff was led by an automotive sector undermined by a fire at a key parts factory, June’s recovery (a 0.83 percent month-to-month rise) was keyed by the fading of that fire’s effects. Second, the May overall monthly manufacturing downturn is now viewed as considerably steeper (a 1.03 percent slump) than previously estimated (0.63 percent), and revisions for February through April were negative.

The May overall manufacturing numbers worsened because the fire-related damage to automotive production was significantly greater (down 8.75 percent on month) than previous reported (6.45 percent). Indeed, this nosedive was the sector’s worst since the 10.33 falloff in May, 2009 – as a steep, recession-related slide in automotive output was bottoming out.

As a result, it’s no surprise that the June sequential production recovery produced the best monthly increase in constant dollar combined vehicles and parts output (7.77 percent) since July, 2015’s 8.94 percent surge.

The dominant automotive effect was also apparent from the figures for price-adjusted manufacturing production outside that sector – which continued signaling some output softening. In May, the real monthly output drop is now judged to have been 0.43 percent – much bigger than the 0.18 percent decline previously reported. And these industries boosted their real production in June by only 0.14 percent sequentially.

The negative revisions to inflation-adjusted manufacturing output stretched back well past May. April’s previously upgraded 0.57 percent monthly advance was downgraded to 0.53 percent. March’s repeatedly downgraded 0.11 percent sequential decrease is now judged to be a 0.14 percent decline. Only February departed partly from the pattern – its monthly output advance was upgraded back to 1.40 percent after being reduced most recently from that level to 1.39 percent.

The new June figures also showed that inflation-adjusted U.S. manufacturing output still remains 3.50 percent lower than at its peak when the last recession began – more than ten years ago, at the end of 2007.

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(What’s Left of) Our Economy: May US Manufacturing Output Figures Could Feed Optimism or Pessimism

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

May’s Federal Reserve domestic U.S. manufacturing production figures presented a puzzling glass-half-empty-half-full picture. Overall sequential real output levels were down 0.63 percent – their worst such performance since July, 2013’s 1.06 percent decrease. Clearly playing a big role was a fire at a factory producing parts for especially popular pickup truck models, which helped depress after-inflation automotive production by 6.45 percent – its worst such performance since April, 2011’s 7.91 percent plummet.

Yet stripped of automotive’s woes, inflation-adjusted manufacturing output was still down 0.18 percent on month in May, and the month’s decline represented the third such fall-off in the last five months. Largely as a result, industry’s annual constant dollar production increase improved in May by just 1.85 percent – the slowest such rate since January’s 1.10 percent. The automotive decline helped drag down monthly production in the durable goods super-sector by 1.16 percent in price-adjusted terms – the biggest such decrease since July, 2013’s 1.42 percent. Real output in the smaller non-durable goods super-sector was off only 0.08 percent in May.

After-inflation manufacturing output is still down 3.85 percent since the start of the last recession – more than eleven years ago.

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

>May’s Federal Reserve industrial production figures contained evidence for both optimism and pessimism about the U.S. economy and its domestic manufacturing sector.

>Optimists could reasonably blame much of the 0.63 percent sequential drop in real manufacturing output – the worst monthly decrease since July, 2013’s 1.06 percent decline – on a fire at a factory providing parts for popular U.S. pickup truck models.

>And indeed, the May overall manufacturing production swoon was led by a 6.45 percent on-month plunge in motor vehicle and parts output – the worst such performance since April, 2011’s 7.91 percent.

>But pessimists could note that even counting the automotive effect, the rest of domestic manufacturing posted a 0.18 percent dip in monthly inflation-adjusted output – the third such shrinkage in five months.

>Largely as a result, manufacturing’s annual growth rate in May was down to 1.85 percent – its weakest since January’s 1.10 percent. Between the previous Mays, real manufacturing production expanded by 1.87 percent.

>Automotive’s troubles also showed up in the results for the durable goods super-sector in which it’s found. Durable goods’ after-inflation production sank by 1.16 percent sequentially in May – its worst such performance since July, 2013’s 1.42 percent plummet.

>In addition, its 1.97 percent constant dollar May annual growth rate was durable goods’ slowest since January’s 0.94 percent. Between the previous Mays, price-adjusted durable goods production advanced by 2.18 percent.

>Inflation-adjusted output held up better in the smaller non-durables super-sector in May. Its monthly production slipped by just 0.08 percent.

>On-year in May, non-durables’ real production rose by 1.73 percent. As with durable goods, this growth rate is the slowest since January (1.28 percent), but the deceleration has been smaller. Moreover, this year’s May annual production rate for non-durables was better than that for the previous Mays (1.57 percent).

>Revisions for overall real manufacturing production were slightly negative. April’s previously 0.47 percent monthly increase was upgraded to 0.57 percent. March’s already downgraded 0.02 percent rise was downgraded to a 0.11 percent decline. And February’s downwardly revised 1.40 percent increase was bumped down again to 1.39 percent.

>Largely as a result, in price-adjusted terms, domestic manufacturing’s production is now 3.85 percent lower than at the onset of the Great Recession – more than eleven years ago, at the end of 2007.

>After-inflation durable goods output is now 0.10 percent below the levels it hit in December, 2007, and 0.13 percent less than in January, 2008 (its last actual peak).

>Despite their recent out-performance, the non-durables sector has fared much worse since the last recession hit. Its constant dollar output is down fully 8.35 percent from its previous peak, which came in July, 2007.

(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.

(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: 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: November Figures Show U.S. Manufacturing Upswing Intact

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

The Federal Reserve’s new industrial production figures for November revealed that the strong bounceback from the previous months’ hurricanes is fading. Sequential growth cooled from an upwardly revised 1.45 percent to 0.22 percent, with most of the deterioration coming in non-durable goods sectors either concentrated heavily in Gulf states, like petroleum refinery, or heavily dependent on oil and natural gas for feedstocks, like chemicals.

Even so, the latest overall monthly expansion in manufacturing, coupled with slightly negative revisions from July through September were enough to produce 2.72 percent year-on-year price-adjusted production growth in November – industry’s best such total since July, 2014’s 2.82 percent. Moreover, the higher October monthly real output increase was represented industry’s best sequential growth since May, 2010’s 1.49 percent. Despite some recent signs of life, the automotive sector – which led domestic manufacturing’s strong early comeback from its deep recessionary dive – remained in a technical recession in November. Real production in motor vehicles and parts combined is down 0.12 percent since July, 2015.

The latest results pulled manufacturing’s real output levels to just 2.38 percent below their prec-recession peak, nearly a data decade ago, in December, 2007.

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

>New Federal Reserve industrial production figures reveal that in November, the hurricanes bounceback effect in after-inflation manufacturing output faded, but real monthly growth was sufficient to push the year-on-year figure to its best level in more than three years.

>Constant dollar production rose 0.22 percent sequentially in November – down substantially from October’s upwardly revised 1.45 percent. But the new October figure amounted to manufacturing’s best month-to-month inflation adjusted growth since the 1.49 percent achieved in May, 2010.

>Moreover, November’s manufacturing production growth sufficed to bring the month’s year-on-year total to 2.72 percent in real terms – the best such growth since July, 2014’s 2.82 percent.

>Most of the slower rate of the real growth slowdown came in the hurricane-affected industries that enjoyed such strong production recoveries in October.

>In one of the most dramatic examples, examples, after-inflation production in organic chemicals sank by 14.92 percent on month in September. October’s results? Up 27.96 percent – a marginal downgrade from the 28.05 percent reported last month, but still the biggest advance on record (going back to 1986). In November, inflation-adjusted production rose again – but by just 1.06 percent.

>In petroleum refining, September’s sequential constant dollar output drop has been downgraded from 2.11 percent to 4.16 percent. In October, it rebounded by an upwardly revised 5.91 percent – the best such performance since October, 2008’s 17.72 percent. In November, however, price-adjusted production dipped on month by 0.50 percent.

>In the huge chemicals sector in which these and many of these hurricane-impacted industries are located, the August and September constant dollar output monthly drops have been upgraded slightly on net. But October’s after-inflation output bounceback, already its best on record (going back to 1972) has been revised upward, too – from 5.82 percent to six percent. In November, it fell back but 0.19 percent.

>In turn, in the non-durable goods super-sector in which chemicals are found, sizable monthly real production fall-offs in August and September were followed by a sequential October spurt initially reported as 2.33 percent – its best such performance since January, 1983.

>Now the October figure has been upgraded to a 2.53 percent rise – the best on record (going back to January, 1972. In November, constant dollar production levels were down sequentially – but by a mere 0.01 percent.

>A small upward revision to October’s real sequential automotive output growth helped end a technical recession (two or more straight quarters of cumulative inflation-adjusted output decline) in a sector that led manufacturing’s overall early recovery comeback from the sharp recessionary downturn.

>But a longer term slump continued, with combined motor vehicle and parts price-adjusted production off 0.12 percent since July, 2015.

>Nonetheless, its 0.09 percent monthly real production increase in November marked the fourth straight month of sequential real output improvements in automotive – the best such stretch since the May-October period of 2016.

>As of November, domestic manufacturing is still smaller in real terms than at the onset of the Great Recession – which began in December, 2007. But they also showed that, since October, the inflation-adjusted output gap has closed from 2.56 percent to 2.38 percent.

(What’s Left of) Our Economy: New Fed Figures Show U.S. Manufacturing Blowing Past Hurricane Setbacks

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automotive, chemicals, Federal Reserve, Great Recession, hurricanes, industrial production, inflation-adjusted growth, manufacturing, nondurable goods, petroleum refining, recovery, {What's Left of) Our Economy

The Federal Reserve’s new industrial production figures for October (released last Thursday) illustrated the perils of measuring economic performance month-by-month – especially where hurricanes and other individual shocks are concerned. For most of the industries hit hardest by the recent storms staged strong and even record sequential production bouncebacks in October.

At the same time, the data also make clear that the strong output momentum exhibited by America’s domestic manufacturing before the hurricanes continued even as they undercut sectors highly concentrated on the Texas and Louisiana Gulf coasts; and that this strength extended into October.

The month’s strong (1.29 percent) monthly inflation-adjusted production gain, combined with upward revisions, lifted manufacturing out of its latest output recession. And the October year-on-year in real output increase (2.73 percent) was industry’s best July, 2012’s three percent. The technical recession into which the automotive sector has fallen continued into its fifteenth month in October, but even here some good news emerged, as constant dollar output rose for the fourth straight month – the best such stretch since last May through October.

Overall, manufacturing’s strong recent after-inflation output performance has brought the sector to within 2.56 percent of the production levels it reached just before the last recession struck – nearly ten years ago, at the end of 2007.

Here are the manufacturing highlights of the Federal Reserve’s October industrial production report: 

>American domestic manufacturers overcame their hurricane-related losses and then some in October, according to new Federal Reserve industrial production data that show month-on-month real output gains and revisions strong enough to life the entire sector out of its latest technical recession.

>After-inflation production rose by 1.29 percent on month in October, the Fed reported – the best such improvement since April’s 1.37 percent.

>Positive revisions buoyed manufacturing as well. September’s constant dollar production – which was initially reported to have advanced by 0.10 percent sequentially despite the hurricanes – is now estimated as a 0.38 percent rise. August’s monthly real output decline was revised down again, from a 0.20 percent dip to 0.16 percent. And rather than decreasing by 0.35 percent in July, that month’s real manufacturing output is now judged to have flat-lined.

>Keying the October monthly real production surge in manufacturing were the sectors hit hardest by the recent hurricanes because they are heavily concentrated along the Texas and Louisiana coasts of the Gulf of Mexico, and especially because they rely on oil and natural gas as feedstocks.

>For example, price-adjusted production in organic chemicals cratered by a downwardly revised 14.92 percent on month in September. But in October, the sector’s after-inflation production skyrocketed by 28.05 percent – the biggest improvement on record (in this case, going back to 1986).

>Inflation-adjusted petroleum refinery output dropped sequentially in September by an upwardly revised 2.11 percent. October’s monthly 4.60 percent increase was the sector’s best since October, 2008’s 17.72 percent.

>In the huge chemicals sector in which many of these hurricane-impacted industries are located, constant dollar output in August and September is now reported to have dropped month-to-month by 2.57 percent and 2.22 percent – slightly better results that initially pegged, but still the worst since recessionary December, 2008’s 4.85 percent shrinkage. But October’s 5.82 percent sequential real production increase was its best monthly figure on record (in this case, going back to 1972).

>And in the non-durable goods sector in which chemicals are found, two sizable monthly production fall-offs in August and September were followed by a 2.33 percent sequential spurt in output in October – its best such performance since January, 1983.

>Nonetheless, some hurricane-affected sectors continued to lag. In plastics materials and resins, September real output tumbled by 8.16 percent sequentially – its worst month since recessionary December, 2008 (11.72 percent).

>In October, however, inflation-adjusted production slipped by another 4.65 percent sequentially, making for the worst two-month drop (12.43 percent) since November and December, 2008 (23.31 percent).

>In the automotive sector, a technical recession (more than two straight quarters of cumulative real output decline) continued into its fifteenth month in October. Since July, 2016, inflation-adjusted production is off by 0.23 percent.

>But the industry, which led manufacturing’s overall early recovery comeback from its sharp recessionary downturn, has shown some signs of life in recent months.

>The October Fed figures showed that its constant-dollar output is now up for three straight months. That kind of improvement hasn’t been seen since the May-October period of 2016.

>Further, revisions have been positive, including a September upgrade all the way from 0.07 percent to 1.69 percent.

>October’s Fed figures still left domestic manufacturing considerably smaller than at the onset of the Great Recession – which began in December, 2007. But the October monthly figures plus the revisions produced major catch-up. Last month’s Fed industrial production report showed that real manufacturing output remained 4.26 percent lower than when the last recession broke out. The October report shows the gap has narrowed to 2.56 percent.

(What’s Left of) Our Economy: September Sees Bigger Hurricane Toll for U.S. Manufacturing but Fractional Overall Production Gain

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

The Federal Reserve’s new industrial production figures show greater hurricane-related damage to real U.S. manufacturing output in September than in August, with the losses in chemical industries using oil and gas feedstocks great enough to plunge all of domestic industry into a technical recession. Inflation-adjusted manufacturing production is now 0.14 percent lower than in February. Yet on month, overall after-inflation manufacturing output eked out a 0.10 percent gain.

Most seriously affected by the devastation of the energy-rich Texas and Louisiana Gulf coasts were organic chemicals (where monthly production plunged by 14.71 percent), and plastics materials and resins (down 8.16 percent) — both post-recession worsts. The volatile artificial and synthetic fibers and filaments sector, whose after-inflation sequential output was reported to have sunk by 11.25 percent on month in August saw that figure upgraded to an 8.44 percent decline and boosted its monthly real output in September by 5.83 percent – its best since last September (9.67 percent). Price-adjusted oil refinery production for August was slightly downgraded to a 2.52 percent fall-off (its biggest since January, 2010’s 2.75 percent), but September monthly production dipped only fractionally.

The non-durable goods supersector containing these chemical industries saw its constant dollar output slump by the greatest rate (0.89 percent) since January, 2015 (1.20 percent). Revisions for real manufacturing output as a whole were negative, with August’s reading slightly upgraded but July’s downgraded from a slight increase to a significant drop.

Good news came from the automotive sector, however, especially its first back-to-back monthly real production increases since the May-October period last year, and a strongly upgraded August gain (3.56 percent) that was the sector’s best since June, 2016 (3.89 percent). As of September, however, in inflation-adjusted terms, American manufacturing is 4.26 percent smaller than when the last recession began at the end of 2007 – more than nine years ago.

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

>Although September’s manufacturing production figures showed hurricane-related damage to American industry to be considerably worse than in August, and indeed bad enough to plunge the entire sector into a technical recession, industry managed an overall 0.10 percent real monthly production increase during the months.

>Due to major constant dollar output drops in chemicals and especially sectors heavily reliant on oil and gas feedstocks from the storm-struck Texas and Louisiana Gulf coasts, domestic manufacturing output after inflation was 0.14 percent lower in September than in February – a seven-month stretch that conforms with the standard definition of a recession (two consecutive quarters of economic contraction).

>The worst September sequential real output losses were suffered by organic chemicals (14.71 percent), and plastics materials and resins (8.16 percent). These decreases were the biggest experienced by these industries since recessionary September, 2008 (24.92 percent), and December, 2008 (11.72 percent), respectively.

>Interestingly, an artificial and synthetic filaments and fibers sector whose (volatile) real production fell sequentially by an initially reported 9.10 percent saw that result now judged as an 8.44 percent drop (still its biggest since recessionary November, 2008’s 11.25 percent). Moreover, its September production is now pegged as rising by 5.83 percent – the best such on month increase since last September’s 9.67 percent.

>Similarly, although inflation-adjusted petroleum refinery output in September dropped sequentially by 2.52 percent (the biggest such fall-off since January, 2010’s 2.75 percent), the monthly August decrease was revised up from 1.93 percent to a minimal 0.06 percent.

>All the same, these results were enough to depress monthly constant dollar output in the enormous chemicals industry by a downwardly revised 2.31 percent in August and another 2.62 percent in September. The latter result was the sector’s worst such result since recessionary December, 2008’s 4.85 percent shrinkage.

>And in the larger non-durable goods supersector, although August’s monthly production was upgraded modestly to a 0.63 percent decline in real terms, real output decreased by another 0.89 percent – its worst such figure since winter-affected January, 2014’s 1.20 percent.

>Despite the fractional inflation-adjusted September production uptick in manufacturing overall, , and August’s upward revision from a 0.26 percent sequential decline to 0.20 percent, July’s results were changed from a 0.04 percent rise to a 0.35 percent drop – big enough to turn overall revisions negative.

>Nonetheless, the automotive sector produced some good news.

>It’s true that July real output for this industry, which has led manufacturing’s bounceback during most of the current economic recovery, was revised down from a 4.16 percent drop to 4.85 percent – its worst since winter-affected January, 2014’s 5.87 percent. But August’s month-on-month improvement – revised all the way up from 2.16 percent to 3.56 percent – was its best since June, 2016’s (3.89 percent).

>Moreover, although September’s sequential output rise was a mere 0.07 percent, it produced the first two-month stretch of automotive output improvements since the May-October stretch of 2016.

>As of September, however, domestic manufacturing still had not yet completed its recovery from the historic Great Recession. Real production was 4.26 percent lower than when that slump began, more than nine years ago, in December, 2007.

(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.