By Tyler Durden
Authored by Danielle DiMartino Booth via Bloomberg.com,
The revival of the auto industry drove the factory sector out of recession; the flipside doesn’t look promising.
Federal Reserve data released last week on July industrial production offered little more than more of the same. Despite post-election optimism for a rebound in activity on the nation’s factory floors, the data reveal a continued throttling down in the growth rate to just over 2 percent compared with this time last year.
The main drag on activity — the auto sector — should come as no surprise to investors. Rather than rising by 0.2 percent over June as projected, manufacturing production contracted by 0.1 percent, marking the third decline in five months. Motor vehicles and parts production fell by 3.6 percent on the month, taking the year-over-year slide to five percent.
Blue Line: IP Manufacturing, Growth Y-o-Y%… Red Line: IP Manufacturing Ex-Motor Vehicles and Parts, Growth Y-o-Y%
Evidence continues to build that a sampling error may be to blame for the surprising strength in June and July car sales. Inventory continues to pile up, suggesting more production cuts are in the offing: As of June, the latest data on hand, auto inventories were up 7.4 percent …read more