Tuesday, July 17, 2012

Mixed June Industrial Production & Capacity Utilization

Industrial production came in above consensus and higher than our estimate, while capacity utilization was slightly below our estimate but significantly lower than consensus.  With higher production but disappointing capacity utilization, it appears that there is a sizable deadweight loss out there in the jobs market.  Unfortunately, this combo of news may not push the Fed to announce a QE3 in August or before end of 2012; but the market is still hoping. 

  • June industrial production index increased 0.4% versus the 0.3% consensus, and certainly above our 1% expected decline.  We note that the May index was adjusted lower by 0.3%.  In addition, the index was revised lower for three out of the first five months of 2012.
  • Capacity utilization for June was 78.9%, below our 79.0% estimate and the 79.2% consensus.  Similar to the production index, capacity utilization for May was revised down by 30bps.  It was revised down in four of the first five months of this year. 

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