The Fed released the
August Industrial Production and Capacity Utilization numbers one hour ago. The numbers indicate a slight uptick in production. Motor vehicle production was distorted by the cash-for-clunkers program.
Manufacturing production ex. motor vehicles is up 0,4%. There may have been some flow through to other sectors (ie steel) from the cash-for-clunkers which distorted the results. Owners should examine carefully next month's data to verify that Production and Capacity have leveled out.
Owners should also note that Production may have leveled out, but a large gap remains between capacity and utilization. The attached charts describe the situation in stark terms. Also note Equipment production appears to have been bolstered by Defense orders. Private Equipment demand remains weak.
Owners can conclude that Backlogs will remain at low levels. Margins will also remain weak. Gudovac examined the backlog and margin situation in some detail in
July.
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Don't Get Massacred !
Gudovac1941
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