The latest June economic datapoints in the form of Industrial Production and Capacity Utilization confirm the weakness is far more than just a soft patch: IP was up 0.2%, missing expectations of 0.3%, with the prior now having been revised to negative 0.1% from up 0.1%. Capacity Utilization was unchanged at 76.7% on expectations of a rise to 76.9%: this is what happens when the economy is still struggling with an inventory hoarding glut. And with inventories continuing to rise and being the only silver lining, expect these indicator to post further weakness well into Q3. Naturally, Japan is to blame once again: "In the second quarter, supply chain disruptions following the earthquake in Japan curtailed the production of motor vehicles and parts and restrained output in related industries; the production index for overall manufacturing was little changed for the quarter."
We keep waiting for that auto production-driven renaissance. And waiting... And waiting:
In June, the production of consumer goods was unchanged, with a decline of 0.5 percent in durables offsetting an increase of 0.2 percent in nondurables. Among consumer durables, lower production of automotive products; appliances, furniture, and carpeting; and miscellaneous goods more than offset a small gain in home electronics. Within consumer nondurables, the output of non-energy nondurables was unchanged; increased output of chemical products was offset by declines elsewhere. The index for consumer energy products moved up 0.8 percent, with gains in the indexes for fuels and for residential utilities.
And some more on utilization:
Capacity utilization rates in June at industries grouped by stage of process were as follows: At the crude stage, utilization increased 0.2 percentage point to 87.2 percent, a rate 0.8 percentage point above its long-run (1972--2010) average; at the primary and semifinished stages, utilization rose 0.4 percentage point to 74.1 percent, a rate 7.2 percentage points below its long-run average; and at the finished stage, utilization decreased 0.4 percentage point to 75.4 percent, a rate 1.9 percentage points below its long-run average.
And a pretty chart from SMRA to go with the data. Just a few more months until we get the positive to negative y/y inflection point: