US Production and Utilization Post Increase in August

Morning indicator releases in the US, including industrial production and capacity utilization, posted largely in line or better than economists had expected. The figured validated dollar weakness seen earlier in the session, while equity markets advanced. The Dow currently trades at the highest levels since October, with the possibility for the seventh positive close in the past eight session. Meanwhile, commodities appear mixed with crude posted a slight gain while gold rose considerably to over $1020 per troy ounce.

[B]Industrial Production[/B] rose eight-tenths of a percent in August to mark the second monthly gain following a string of declines dating back to November. The previous month also saw an upward revision to a 1.0% rise from a move of 0.5%. Of note, production is down 10.7% from the year ago. While slight increases were noted in most sectors, the “cash-for-clunkers” program in the US that ran through August 24 marked a sharp rise in automotives. Manufacturing of motor vehicle parts saw a sharp gain of 5.5% following a 20.1% move in July. Similarly, assemblies of motor vehicles increased to 6.57 million from 5.86 million on an annualized basis. While these results were largely expected, future demand in appliances may see weakness while it is unclear what effect the CARS program will have on auto sales in the months ahead.

[B]Capacity Utilization[/B] posted a gain to 69.6% in August from 69.0%, the highest rate in six months. Sector specific increases included a rise in durables to 60.1% from 59.7%, while manufacturing overall climbed to 66.6% from 66.1%. Ultimately, the figure remains well below the 80.9% average seen in the period from 1972 through 2008.