Worse than expected, but modest growth from depressed levels.


The Federal Reserve inadvertently released what is a weak July industrial production report about a 1/2 hour early this morning. Headline production rose 0.2 percent vs expectations for 0.3 percent with manufacturing output showing outright contraction, at minus 0.1 percent vs Econoday’s consensus for a 0.2 percent gain. Capacity utilization hit expectations at 76.7 percent.

A 3rd straight decline in motor vehicles, down 3.6 percent in July, held down the month’s production. Excluding vehicles, manufacturing rose 0.2 percent. But also not helping were business equipment, down 0.5 percent in the month, and construction supplies, down 0.4 percent. On the plus side with small gains are consumer goods, materials, and non-industrial supplies.

Outside of manufacturing, mining posted a 4th straight solid gain, at 0.4 percent, with utilities swinging higher with a 1.6 percent July increase.

This report, which is the first definitive look at July’s factory sector, is unexpectedly flat and puts an end to the run of recently strong economic data. Strength in sentiment surveys like this morning’s Philly Fed do not always match the real world. Vehicle sales were up in July but it has been a tough year for the sector. And given the decline in this report’s manufacturing component, the upward momentum that the factory sector was showing looks less certain now.

As previously discussed, it’s only going to get worse:

Blackstone co-founder Steve Schwarzman and other CEOs on the now-defunct White House policy forum were perplexed by President Donald Trump’s efforts to take responsibility for disbanding the group, sources told The New York Times.

Schwarzman, who chaired the group, thought he had an agreement with the White House to announce that the idea of ending the Strategic and Policy Forum was a joint decision, the Times reported.

The CEOs decided during a Wednesday morning conference call to dissolve the forum in the uproar that followed Trump’s news conference in which he made comments that were deemed supportive of white supremacists.

Trumped up expectations taking a hit: