Fresh on the heels of a solid report on April housing starts, the U.S. Commerce Department, at 9:15 (EDT) this morning, released data showing that industrial production had increased by a strong 1.1% in April, nearly twice the gain that had been expected for the month.
However, while this report was encouraging, it should be noted that the government has made some revisions for the first three months of this year. Most important, in March, the previous unchanged reading was revised downward to show a decline of 0.6% for the month. This pullback exaggerated the increase in the most recent month. However, the gain was still formidable and gives us some optimism about the industrial category going forward.
At the same time, capacity utilization at the nation's factories, mines, and utilities rose to 79.2% last month from a revised 78.4% in March. Initially, the March operating level had been estimated at 78.6%.
Breaking down the production and usage numbers into the component parts, we find that output rose by a more modest 0.6% in manufacturing, which is by far the largest category, while it gained 1.6% in mining, and a sizable 4.5% in the utilities area. All told, manufacturing output is up 5.8% over the past year, while the respective gains in mining (4.9%) and in utilities (1.1%) are less impressive.
Moreover, when we break down the capacity utilization situation, we find that manufacturing rose from 77.6% in March to 77.9% last month. Here, too, manufacturing is the largest category by far. Meanwhile, mining increased from 87.5% of capacity to 88.8% last month, while the gain in the utilities sector was from 73.3% to 76.4%. The large jump here reflected the aforementioned sizable increase in output in this area in April.
Manufacturing has played a key role in the economic recovery, although this sector has shown some signs of moderating in the past couple of months. In April, for example, the Institute for Supply Management, an industry trade group, noted that manufacturing had flattened out last month, coming in at a reading of 53.5, which was just a tick higher than the March survey result of 53.4. Taken as a whole, however, this latest report was reassuring, and suggests further that this nation, unlike much of the euro zone, is not headed for a recession in 2012.
At the time this article was written, the author did not have positions in any of the companies mentioned.