Chicago Fed: Midwest Manufacturing Grew 12.5% Over Last Year, vs. 5.2% for U.S. and 2.2% for GDP; Midwest Auto Output Is Above 2007 Levels
Midwest manufacturing is booming, especially autos.
The Chicago Federal Reserve reported today that its Midwest Manufacturing Index increased 1.8% in July from June to a four-year high, following a revised 0.9% monthly gain in June. On an annual basis, regional manufacturing activity in the 7th Federal Reserve district improved by 12.5% in July from a year earlier, more than twice the annual 5.2% increase in the national manufacturing component of industrial production through July (see chart above). In comparison, the overall U.S. economy (real GDP) grew by only 2.2% from June 2011 to June 2012.
Here are some
other highlights of manufacturing activity in the 7th Federal Reserve district
that covers Illinois, Indiana, Iowa, Michigan, and Wisconsin:
1. Regional machinery output in April gained 11.6% from its year-earlier level, compared to a 6.8% increase in machinery output at the national level.
2. Regional steel output improved 8.1% from its July 2011 level, compared to a 5.2% increase in national steel output over that period.
3. The Midwest’s automotive output increased by an eye-popping 30% in July from a year ago, compared to a 15.7% gain in national automotive output. The index reading of 102.6 for Midwest auto sector production in July was the highest level since May 2007 more than five years ago, and brings auto industry production in the Midwest to a level above pre-recession levels of auto production from 2005-2007 when the Midwest automotive index averaged 100.1 (see bottom chart above).
MP: Midwest manufacturing output growth over the last year (12.5%) continues to lead national manufacturing output growth (5.2%), which continues to lead overall U.S. economic growth measured by real GDP (2.2%). Today's Chicago Fed report provides further confirmation that U.S. manufacturing, especially factory activity in the Midwest region, remains at the forefront of the economic expansion measured by growth rates in real output. And the Midwest's automotive sector has made a complete recovery from the 2007-2009 recession with automotive production now at a five-year high and above the pre-recession levels of 2007.
Bottom Line: If the economy is in recession, or about to enter a recession, it's certainly not being reflected in any downturn in factory activity in America's manufacturing heartland, which is experiencing a manufacturing renaissance and does not appear to be anywhere close to being about to fall off a recessionary cliff.
1. Regional machinery output in April gained 11.6% from its year-earlier level, compared to a 6.8% increase in machinery output at the national level.
2. Regional steel output improved 8.1% from its July 2011 level, compared to a 5.2% increase in national steel output over that period.
3. The Midwest’s automotive output increased by an eye-popping 30% in July from a year ago, compared to a 15.7% gain in national automotive output. The index reading of 102.6 for Midwest auto sector production in July was the highest level since May 2007 more than five years ago, and brings auto industry production in the Midwest to a level above pre-recession levels of auto production from 2005-2007 when the Midwest automotive index averaged 100.1 (see bottom chart above).
MP: Midwest manufacturing output growth over the last year (12.5%) continues to lead national manufacturing output growth (5.2%), which continues to lead overall U.S. economic growth measured by real GDP (2.2%). Today's Chicago Fed report provides further confirmation that U.S. manufacturing, especially factory activity in the Midwest region, remains at the forefront of the economic expansion measured by growth rates in real output. And the Midwest's automotive sector has made a complete recovery from the 2007-2009 recession with automotive production now at a five-year high and above the pre-recession levels of 2007.
Bottom Line: If the economy is in recession, or about to enter a recession, it's certainly not being reflected in any downturn in factory activity in America's manufacturing heartland, which is experiencing a manufacturing renaissance and does not appear to be anywhere close to being about to fall off a recessionary cliff.
17 Comments:
Automobiles certainly have been a bright spot here. Especially over the past two years, where annual production has been rising at an average rate of 20.6%.
At the risk of sounding like a cold-hearted bastard, the earthquake in Japan last year has really helped us. Japanese automakers are determined to prevent such a catastrophe again, so they want to turn the American Midwest into an export hub. The Midwest is much more insulated from natural disasters than Japan is.
I should state the 20.6% I quoted above is for the entire US, not just the Mid-West.
Auto manufacturing is often thought of as the assembly of parts in huge factories. That is a big part but engines and transmissions are mostly built by the automakers also.
Ford has just added front-wheel- drive hybrid transmissions to its capabilities at the Van Dyke Transmission Plant in Sterling Heights, Michigan.
The $220 million investment in upgrades to the Van Dyke Transmission Plant is...
"part of Ford’s commitment to add 12,000 U.S. hourly jobs by 2015."
as was pointed out to me in an e-mail this morning, such a recession might not be shown in this particular measure, but if one looks at the yoy growth rate of durables ex aircraft and defense (and look at the raw, non seasonally adjusted data), it has gone negative and is now below the levels at which we entered the last 2 recessions.
(thanks bart)
though i'm not sure this is conclusive evidence of recession in and of itself, it surely is a significant red flag that we ought to be very concerned about the current economic activity.
For what its worth, here's the chart showing "yoy growth rate of durables ex aircraft and defense (and look at the raw, non seasonally adjusted data), it has gone negative and is now below the levels at which we entered the last 2 recessions."
http://www.nowandfutures.com/images/durables_recession.png
I wonder what percent of these automobile purchases were made by the brokest government in the history of history...
Any data on that number?
To be perfectly honest, I am not overly concerned with the monthly decline in NDFCGXA yet. Here is why: the uptick in INDPRO Rate of change (indicated) is not felt (and will not be) in New Orders. New Orders to me is suggesting slower growth will begin in the near term, but not a current recession.
Please note that I am using the roc's of the 12MMT/A to show my point. I could do this with the monthly roc's, but it is much clearer this way. I also deleted the dates on the X-axis as not to get bogged down on timing issues.
Also, for much of the past year and a half, monthly New Orders have been growing at twice (in some cases, thrice) the historical rate of growth, so this constant decline in the ROC hasn't really been a surprise to me. If times were normal, I would share your concern. I'm just not there yet
I wonder what percent of these automobile purchases were made by the brokest government in the history of history...
Any data on that number?
As far as I know, the Greeks aren't buying US made vehicles.
Just kidding, I know what you meant.
The best numbers I can find say that the federal government bought 145,473 between 2009 and 2010 as part of the stimulus. That is about 72,736 vehicles per year. Assuming the government aims to keep that target consistent, than let's say that 72,736 vehicles were purchased in 2011. In 2011, the US produced 8.4 million vehicles. So, assuming the stimulus purchases of vehicles was extended into 2012, that would mean that government purchases accounted for 0.9% of US automobile manufacturing. In 2009, that number was 1.3%. In 2010, it was 1.0%. So, government purchases hover around 1.0% of US automobile manufacturing.
By the way, my above calculations are only for the Federal government (and using a fair amount of assumption).
According to this article, all government (local, state, feds) totaled 214,500 units in 2011. That would make the government share of production 2.6% in 2011. At its 2007 peak (according to the article), government purchases totaled 313,000 units, or 3.0% of production.
By the way, my above calculations regarding government fleet purchases are chock-full of assumptions (I did my best to label them as such). Just take my numbers for what they are worth: an estimation rather than a concrete figure.
JM,
Give up. Accept the "truth". Inflation has actually been 150% for the past 70 years and WE'RE ALL GONNA DIE!!!!!!!
Give up. Accept the "truth". Inflation has actually been 150% for the past 70 years and WE'RE ALL GONNA DIE!!!!!!!
I've accepted that fact a long time ago. But when I stand before St. Peter I can say "at least I f****** tried." That's the only eulogy I need.
By the way, that's from a song and not fightin' words.
Romney is braying about a "strong dollar" but let's hope he is not serious. It is hard to tell if Romney is serious about anything, since he believes in creationism before science and that Obama's birth certificate may be phony.
A strong dollar (and thighs money) would set the USA back into recession.
A dollar that gives US industry a chance is proving great for Middle America.
I know just what you mean, Benji. Why, as a candidate, Obama was braying about Bush's wars...and then the Nobel Peace Prize winner marched into Libya and invaded Pakistan so he could personally (according to him) capture and slaughter bin Laden with one hand as he bestowed free health care for all with the other and cured cancr with his big toe. He was also braying about the outrageous suspension of Habeas Corpus in the Patriot Act as a candidate and senator...and accepted the PA in full for his first act as president elect. Now? Not a peep about Habeas Corpus. The braying on that issue has stopped and started on something else
Braying is what politicians do. It's pretty much the only thing they're any good at.
A strong dollar (and thighs money) would set the USA back into recession.
A dollar that gives US industry a chance is proving great for Middle America.
We want to be careful for what we wish for here. While a weaker dollar would help exports, it would make imports and consumer purchases more expensive, thus lowering the standard of living for these individuals.
Exports account for approximately 10% of GDP. Consumption accounts for approximately 75% of GDP. Do we really want to sacrifice the majority for the sake of the minority?
Our goal should not be a strong dollar or a weak dollar. Our goal should be a stable dollar; one whose value is determined by economic forces rather than political namby-pamby. That is the only path to prosperity.
What exactly is "thighs money"?
Post a Comment
<< Home