Industrial output jumps in August on auto strength

Marketwatch ^ | 8.16.11 | Greg Robb

[Free Vulcan]

WASHINGTON (MarketWatch) — The output of the nation’s factories, mines and utilities surged 0.9% in July as auto assemblies rebounded and consumers turned on their air conditioners, the Federal Reserve said Tuesday.

The gain, the biggest since last December, was in line with economists’ expectations. The key question is whether the increase can be sustained in future months.

Output in June was revised up to a 0.4% gain from the prior estimate of a 0.2% gain and output in May was also revised higher.

[Free Vulcan]

Too early to tell the reasons for the jump. Exports maybe due to a lower dollar? Consumer demand is pathetic right now, so I'm guessing external factors explain it. It may be inventory replacement too after months of slowly moving things out the door, which means it's not sustainable.

[qwertyz]

Easy to explain high auto sales: 1. Thanks to government no-drill policy ensuring persistently high gas prices, people are switching to smaller cars. 2. Thanks to big government market interventions, used car prices are at an all time high and interest rates are low, creating incentives to buy new.

[Leroy S. Mort]

Happy Days are Here Again.

[reed13]

I’m of the opinion that output doesn’t equate to sales here...It’s my opinion (and I know what those are worth) that they’re building inventory.

[DJ MacWoW]

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[Free Vulcan]

Interesting take. I was not aware of the used car situation.

[NonValueAdded]

channel stuffing should not count. Also, should the output figures be “seasonally adjusted” assuming this reflects more of a ramp up for the new model year than a surge in demand?

[ridesthemiles]

Are these figures referring to PRODUCTION or PURCHASING?

This is the time of year for ‘changeover’ for all auto companies.

Therefore, PRODUCTION rises. Those cars ain’t sold yet!!!

The discounts on last year’s models bring some upticks, but with so many out of work, who is buying???