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Industrial Production:  Slower Even Adjusted For Harvey

September 15, 2017
Bottom Line: Industrial activity fell more than expected in August as Hurricane Harvey had a larger impact than forecast. The Fed estimated that declines refining and chemical plant shutdowns on the Gulf Coast accounted for 75bps of the 95bp decline in overall industrial production in August. Overall, the trend was slowing for high-tech and auto-related production before Harvey. The data over the remainder of the year will be volatile due to both hurricanes -- it will likely be late in the year before we have a good sense of how the trend adjusted for weather was resolving in the 2nd Half.

Industrial Production FELL by 0.95% in August, compared with market expectations for an increase of 0.1%. However, the prior month was revised from 0.2% up to 0.4%. Output is now 1.5% ABOVE its year ago level. The Fed estimated that Hurricane Harvey accounted for 0.75 of the 0.95% decline.

  • In August, Mining Output FELL by 0.8%, and is now 9.6% ABOVE its year ago level.
  • Utility Generation FELL by 5.4% and is now 7.8% BELOW its year ago level.
  • Manufacturing Output FELL by 0.3% and is now only 1.5% ABOVE its year ago level.
  • Output in high-tech industries rose by 1.4%
  • Meanwhile, output in the motor vehicle industry rose by 2.2%.
  • Excluding both the high-tech and motor vehicles industries, industrial output decreased by 0.6%.

Capacity Utilization FELL by 0.8 points to 76.1%, compared with market expectations for a higher no change to 76.7%. Moreover, the prior month was revised from 76.7% to 76.9%. Capacity utilization rate is now 0.3 percentage points above its year ago level and 3.9 percentage points below its long-run (1972–2015) average.