Friday, August 14, 2009

Production Pullback: Industrial Production July 2009

Today, the Federal Reserve released their monthly read of industrial production showing a slight upturn to the aggregate production mostly as a result of a significant “cash-for-clunkers” fueled increase in durable goods while many other components continue to show notable weakness.

“Final product” consumer durable goods jumped 7.41% on a month-to-month basis while still remaining 19.16% below the level seen just one year ago.

It’s important to note that although the Federal Government's “cash-for-clunkers” policy breathed life into the vehicle components of the durable goods category, home appliances, furniture and carpeting continued its decline dropping 0.12% since June and 22.34% on a year-over-year basis.

Construction supply production has been showing the most severe contraction seen in at least the last 20 years with wood products falling 23.07% on a year-over-year basis.

Finally, HVAC (heating ventilation and air conditioning) appears to be firmly reflecting the substantial pullback in fixed commercial investment falling a stunning 22.57% on a year-over-year basis.

The following charts (click for larger) show the overall consumer durable component along with the Home Appliances, Furniture and Carpeting sub-component on both a time series and year-over-year basis, construction supply production with the wood products sub-component, and general and business related vehicle production all overlaid with the last two recessions for comparisons purposes.