US industrial production rose by 0.2%m/m in June 2011. This was below market expectations for an increase of 0.3%m/m. On an annual basis, production is up 3.4%y/y, which is well below the recent peak of 6.7%y/y recorded in December 2010. In addition, capacity utilisation remained unchanged at 76.6% in June, also below market expectations for a slight pick-up to 76.9%.
It is clear from the data (and charts attached) that industrial production has experienced a significant slowdown in activity during the past few months, halting the recovery process and contributing to the view that the US economy is experiencing a ‘soft patch’.
Overall US industrial production remains well below the previous peak level of output that was recorded in late 2007, while capacity utilisation is still not back at the long-term average level of utilisation, which is 80.8%. This is not encouraging from an employment perspective.
It is also concerning to see that the University of Michigan consumer confidence index plunged to 63.8 in July, well below market expectations for a rise to 72.2. While this index is thinly surveyed (based on only 500 telephonic interviews) it is one of the first US economic data points to be released for July and suggests that consumers remain troubled, with the weak labour market one of their key concerns. This is also the lowest level the index has recorded since the Great Recession.
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