Industrial production grew at 0.4 percent rate in July, helped by strong output from the nation's utilities. The latest reading, however, was half of June's robust 0.8 percent gain.
The Federal Reserve said Wednesday that manufacturing output increased by 0.1 percent in July, though excluding motor vehicles and parts, manufacturing production rose by 0.7 percent. The output of nondurable manufacturers was up 0.3 percent, while the production of durable manufacturers was unchanged.
Capacity utilization in manufacturing increased to 81 percent, 2.4 percentage points better than its year-ago levels and 1.2 percentage points ahead of its long-term average.
Within durable goods manufacturing, the production of motor vehicles and parts dropped 5.4 percent, more than reversing the improvement seen last month. Assemblies of light vehicle dropped from an annual rate of 11.2 million units in June to 10.2 million in July, and the index for appliances, furniture and carpeting decreased by 0.7 percent.
The index for furniture and related products also fell, but production in all major categories of durables remained unchanged or increased, the Fed said.
Among the major categories of nondurable manufacturing, the indexes for paper and for printing and support declined, and the indexes for chemicals and for petroleum and coal products were unchanged.
The production of food, beverages and tobacco products; textile and product mills; apparel and leather; and plastics and rubber products all registered gains. Output at utilities, no doubt helped by warmer weather, jumped 2 percent, and mining output rose by 0.8 percent, its fourth-straight monthly rise.
Separately, the Labor Department said prices at the consumer level rose by 0.3 percent in July, on the heels of June's 0.2 percent increase. The so-called core index, which excludes food and energy, grew 0.2 percent, having rising by 0.3 percent in each of the previous four months. Clothing prices dropped by 1.2 percent, the largest falloff in almost 20 years.
The Fed left rates unchanged last week for the first time in about two years, and the latest data should leave central bankers feeling fairly confident they did the right thing. Factoring out energy costs, inflation appears to remain well behaved.
“The general economy has slowed and the industrial economy is in the process of decelerating growth,” said Daniel J. Meckstroth, Chief Economist for the Manufacturers Alliance/MAPI. "This, of course, is what the Federal Reserve wants in its quest to contain rising inflation. Today’s consumer price inflation report showing only a 0.2 percent increase in core inflation should be welcome news to the monetary authorities.”