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July 14, 2017 By Peter Boockvar

Mining production lifts


United States

Industrial production in June rose by .4% m/o/m, one tenth more than expected but the .2% increase in the manufacturing component was as expected. It was the mining component that was the catalyst for the headline surprise as rig counts continue to rise. Mining rose 1.6% m/o/m and 9.9% y/o/y. Utility output was flat m/o/m. Within manufacturing, motor vehicle/parts were up by .7% but are up just 1% y/o/y as the industry digests excess inventories and slowing sales. The production of computers/electronics fell for the 2nd month but are up 4.9% y/o/y. The production of machinery equipment rose .6% m/o/m and is up 1.7% y/o/y. Manufacturing production has basically gone nowhere over the past 3 years and remains well below the 2007 peak. See chart:

image001(1)

 

Capacity utilization at 76.6% still remains well below the long term average of about 80% and this in the 9th year of this expansion. Auto’s in particular saw capacity utilization was 82% vs 81.5% in May and 83.3% in April. This low overall level of the extent in which capacity is being utilized helps to partially explain why capital spending remains mediocre.

Bottom line, the rebound in oil drilling was really the only standout in June as manufacturing production was up just 1.2% y/o/y. The latter is consistent with a below 2% type economy that we are now in. As stated earlier, expect another cut to Q2 GDP after the weak retail sales data. Prior to this, the Atlanta Fed is at 2.6%.

 

Filed Under: Latest Data

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About Peter

Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor. Each day The Boock Report provides summaries and commentary on the macro data and news that matter, with analysis of what it all means and how it fits together.

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Disclaimer - Peter Boockvar is an independent economist and market strategist. The Boock Report is independently produced by Peter Boockvar. Peter Boockvar is also the Chief Investment Officer of Bleakley Financial Group, LLC a Registered Investment Adviser. The Boock Report and Bleakley Financial Group, LLC are separate entities. Content contained in The Boock Report newsletters should not be construed as investment advice offered by Bleakley Financial Group, LLC or Peter Boockvar. This market commentary is for informational purposes only and is not meant to constitute a recommendation of any particular investment, security, portfolio of securities, transaction or investment strategy. The views expressed in this commentary should not be taken as advice to buy, sell or hold any security. To the extent any of the content published as part of this commentary may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. No chart, graph, or other figure provided should be used to determine which securities to buy or sell. Consult your advisor about what is best for you.

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