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First Cut: Industrial production flat in June, dragged down by utilities output

Industrial production was flat in June due to a 3.6% drop in utilities production as a hot May gave way to a more seasonal June. Manufacturing managed a 0.4% increase and mining was up 0.2%.

Manufacturing benefited from a 2.9% rise in motor vehicles and parts. Excluding motor vehicles, manufacturing was up a modest 0.2%. Outside of motor vehicles, manufacturing had a 0.5% in construction supplies that probably was due to the more active home building sector.

Mining rose due to a 0.5% increase in oil and gas well drilling. Utilities had declines in electricity of 3.9% and natural gas of 2.0% as demand for air conditioning was lower.

Compared to June 2018, overall output was up 1.3%, a mild increase that suggests that activity has only narrow upward momentum. Much of it was due to a rapid rise in mining of 8.7% from the year-ago month with manufacturing up only 0.4% and utilities down 2.6%.

Capacity utilization continued to run below the 1972-2018 average of 79.8%. In June, capacity use was at 77.9%, down from 78.1% in May. Manufacturing capacity was little changed at 75.9% in June after 75.6% in May.  Mining was also little changed at 91.5% after 91.7%, while utilities capacity fell to 74.6% from 77.6%.

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