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August Productivity Reads Improve Better than Expected

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Tuesday, September 17, 2019

Just before regular trading is open for business this Tuesday morning, new August reads on Industrial Production and Capacity Utilization have been released, with results better than expected on both fronts. Production for the month reached +0.6%, up from the 0.4% expected, and much stronger than the upwardly revised -0.1% reported in July. For Capacity Utilization, we see 77.9% for August, also an improvement from the 77.6% expected and unrevised 77.5% in last month’s release.

This is good news for those looking for some sort of rebound in domestic manufacturing, which had been rather dormant over the past several months. This was following a boost in early 2018 largely from the slashing of corporate tax rates, which allowed companies that produced goods to grow more comfortably. This proved to be a relatively short-term stimulus, however, but hopefully we’re seeing signs of a new bounce-back. Then again, perhaps these reads are just temporarily filling in for disappointing headlines on these metrics earlier this summer.

Once the opening bell rings, we look toward the September print on the Home Builders Index. In recent times, we bottomed out in December 2018 at a read of 56, whereas August brought a level of 66, more or less at the top of a tight range for the summer months. The highest point of this past year came ion October of last year, at 68.

Tomorrow we see the latest update on Housing Starts and Building Permits for the month of August. Expectations are for 1.260 million starts last month, higher than expectations and looking to break a summer trend of disappointing reads: -4.0% month over month in July and -1.8% in June. Permits of 1.300 million expected are down from an upside surprise of 8.4% in July, though a -5.2% miss in June.

Mark Vickery
Senior Editor

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