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Expanding U.S. Manufacturing - 8/28/14

U.S. manufacturing output continues to expand.  According to the Federal Reserve, U.S. factory production surged 1 percent in July after expanding 0.3 percent in June.  The July increase was the largest since February.  Auto production surged 10.1 percent, the largest monthly gain since July of 2009.  There were also significant gains in the production of machinery and computers, which suggests a pick-up in business investment generally. 

Industrial capacity utilization, a measure of how fully firms are utilizing their resources, attained its highest level in July since February 2008.  Manufacturing employment has also been on the rise.  But despite growing use of available resources, there doesn’t remain much evidence of widespread inflationary pressures. 

According to the U.S. Labor Department, the nation’s producer price index for final demand only rose 0.1 percent in July as the cost of energy products declined, offsetting increases in food prices.  During the 12 months ending with July, producer prices increased 1.7 percent.  If one excludes food and energy prices, which are often shaped heavily by non-economic factors such as weather and geopolitical events, producer prices were up only 1.6 percent.

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.