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Manufacturing Production Rebounds, Housing Starts Dip

Following a two-month decline, manufacturing production bounced back in July, increasing 0.7%, according to the Federal Reserve.

The data: Last month, production of durable and nondurable goods rose 1.3% and 0.1% respectively. Overall, manufacturing production has risen 3.2% in the past year.

  • Manufacturing capacity utilization ticked up to 79.8% in July from 79.3% in June. That’s close to April’s 80.1%, the highest reading since August 2000.

Specifics: Manufacturing production data for July varied by industry.

  • Motor vehicles and parts were up 6.6%, fabricated metal goods were up 2.1%, apparel and leather goods were up 1.6% and aerospace and miscellaneous transportation equipment were up 1.5%.
  • Meanwhile, printing and related support activities were down 1.7%, furniture and related goods were down 1.6%, electrical equipment and appliances were down 1.4% and paper and primary metals were both down 0.9%.

Good news: Total industrial production rose 0.6% to a new record in July, after remaining flat in June.

The NAM’s view: “The manufacturing sector has been surprisingly resilient in the face of ongoing challenges with soaring production costs, supply chain bottlenecks, geopolitical and economic uncertainties and workforce shortages,” said NAM Chief Economist Chad Moutray.

Meanwhile, in housing … Construction of new residences dipped to 1,446,000 units in July from 1,599,000 units at the annual rate in June, according to the U.S. Census Bureau. Last month’s number reflects a low of nearly two years.

  • Single-family housing starts declined 10.1% to 916,000 units from 1,019,000 in June, marking the slowest building pace in more than two years. Multifamily housing starts decreased 8.6% in July, to 530,000 from 580,000 in June.
  • Said Moutray, “These figures continue to reflect significant weakening in the housing market, which has been rocked by sharply higher mortgage rates, issues surrounding affordability of housing units and uncertainties in the economic outlook.”
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