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
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.
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.