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Production Bounces, Cap Util At New Post-Pandemic Highs

US DATA
  • Industrial production came in stronger than expected in July at +0.6% M/M (cons +0.3%) after -0.2% in June, and with a similar bounce seen in the manufacturing component.
  • It should be a welcome boost after recent business survey weakness including the ISM manufacturing survey edging lower to a pandemic recovery low of 52.8 in July and with initial evidence from the NY Fed Empire State survey suggesting further, much sharper weakness ahead in August.
  • In signs of continued supply side pressures, capacity utilisation of 80.3% (cons 80.2%) meanwhile poked to a new post-pandemic high. In unrounded terms at 80.27, it’s just off a high of 80.31 last seen in Aug’18 and prior to that not seen since 2008.
  • Treasuries have largely held put with this release as it helped stabilise a quick 2.5bp rally ahead of the data for still +3.5bps on the day in a whippy session that earlier saw a sizeable miss for housing starts (-9.6% vs -2.0% expected) albeit with a positive revision and with a lesser blow to building permits.

US capacity utilisationSource: Bloomberg

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  • Industrial production came in stronger than expected in July at +0.6% M/M (cons +0.3%) after -0.2% in June, and with a similar bounce seen in the manufacturing component.
  • It should be a welcome boost after recent business survey weakness including the ISM manufacturing survey edging lower to a pandemic recovery low of 52.8 in July and with initial evidence from the NY Fed Empire State survey suggesting further, much sharper weakness ahead in August.
  • In signs of continued supply side pressures, capacity utilisation of 80.3% (cons 80.2%) meanwhile poked to a new post-pandemic high. In unrounded terms at 80.27, it’s just off a high of 80.31 last seen in Aug’18 and prior to that not seen since 2008.
  • Treasuries have largely held put with this release as it helped stabilise a quick 2.5bp rally ahead of the data for still +3.5bps on the day in a whippy session that earlier saw a sizeable miss for housing starts (-9.6% vs -2.0% expected) albeit with a positive revision and with a lesser blow to building permits.

US capacity utilisationSource: Bloomberg