New Fed Figures Show Manufacturing in Technical Recession

Alan Tonelson |

Today's Federal Reserve's industrial production release showed that American manufacturing has entered a technical recession, as real output is now down cumulatively since November. This slump is industry's first since the Great Recession's end, and includes both the durable and non-durable goods super-sectors, as well as an automotive complex that had been domestic manufacturing's recovery leader. Despite continued talk of a domestic manufacturing renaissance, industry's after-inflation production is now only 2.23 percent higher than its pre-recession peak more than seven years ago.

Here are the manufacturing highlights of the Federal Reserve's new release on May industrial production:

  • According to the Fed, constant dollar manufacturing production in May fell 0.21 percent from April's levels. As a result, the sector's real output has dropped on net since November (by 0.64 percent) – a six-month stretch that technically qualifies as a recession.
     
  • The May figures showed manufacturing's doldrums to be broad-based. They plunged the non-durable goods super-sector into a technical recession, and they extended similar slumps afflicting durable goods and the automotive industry. The latter has led domestic manufacturing's rebound following a steep recessionary nosedive.
     
  • Non-durables output dropped by 0.65 percent between April and May, and its real production is now 0.31 percent lower than last November.
     
  • Inflation-adjusted durables output in May rose by 0.19 percent on a monthly basis, but is still down 0.14 percent since last July. Real automotive (vehicles and parts) production increased in May by a robust 1.66 percent over April levels, but remains down by 1.66 percent since July.
     
  • The new Fed figures generally made fractionally positive revisions for real manufacturing output for the last few months. April's 0.01 percent improvement was revised up to 0.13 percent, March's 0.29 percent output growth now stands at 0.31 percent, and February's 0.24 percent drop is now estimated to be a 0.18 percent decrease.
     
  • As a result, after-inflation manufacturing output is now just 2.23 percent higher than its level in December, 2007 – more than seven years ago, when the last recession began.
     
  • Manufacturing's year-on-year production increase dropped to 2.05 percent in May – its worst showing of the year. Real manufacturing output increased by 3.80 percent between May, 2013 and May, 2014.
     
  • In durable goods, after-inflation production in May advanced only by 1.84 percent over last May's level – by far its worst performance of the year, and a major fall-off from the 5.85 percent expansion recorded between May, 2013 and May, 2014.
     
  • Non-durable goods 2.29 percent real year-on-year output rise in May was also its weakest of 2015, but was better than its 1.52 percent inflation-adjusted growth from May, 2013 to May, 2014.
     
  • Durable goods' after-inflation production is still 9.29 percent higher than at the last recession's December, 2007 onset. Non-durable goods' real output is still 5.94 percent lower than at its pre-recession peak in July, 2007.

 

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