Industrial production improves, with help from vehicle production: travelin’ man edition
Industrial production improves, with help from vehicle production: travelin’ man edition
– by New Deal democrat
Industrial production increased 1.0% in July. Its manufacturing component increased 0.5%. Total production is still down -0.6% from its peak last autumn, while manufacturing is down -01.%:
These are not recessionary numbers.
It’s worth emphasizing that the unspooling of pandemic related bottlenecks is significantly affecting these numbers. Below I show total manufacturing (black), manufacturing except for motor vehicles (blue), and vehicle manufacturing (red), all normed to 100 as of just before the pandemic:
Production of motor vehicles and parts is up about 10% this year. Were it not for that, manufacturing production would be down further.
Also, here is production of wood products, which has been tracking housing construction, and like construction has also had a little bit of a rebound this year:
This by the way shows an important difference between this metric and the ISM manufacturing index and Fed new orders indexes. The former is weighted by contribution, whereas the latter are diffusion indexes. The two types of indexes are telling us that while the bulk of manufacturing is down significantly, the ramping up of vehicle production is counterbalancing that.
Industrial production continues to falter in May, Angry Bear, New Deal democrat
Long ago, Robert Heinlein wrote a story that had future workers employed crushing cars as they came off assembly lines, because employment was important, most of it was in auto manufacturing, and it just had to be that way apparently. Demand for new cars had to be sustained. Best hope for us is to have all vehicles running on electricity a.s.a.p. and all electricty produced sustainably, so we can keep bustling about with impunity.
Nowadays we have robots aggravating the situation.
Maybe more industrial capacity will be switched over to air-conditioner manufacturing real soon, and HVAC jobs will be even more plentiful, instead.
Must keep vehicle production up, because it means jobs.
Robots are not helping. Bring in the luddites.
Keep bustling around in yer cars.
Buy an electric vehicle!
Just remember, electricity must be produced sustainably!
Fred
Thanks. I thought I was about to be off topic, but Ihave to say just about what you said, though I may have a different attitude about it.
First..THANK YOU NEW DEAL DEMOCRAT for bringing us these reports. Long time ago I noticed that Angry Bear (that is, New Deal Democrat) seemed to be a more reliable predictor of “the economy” that the ususal Public Economists. Trouble is, for me, is that I often don’t really understand the “economics” behind the reports. NDD seems to avoid the “why.” Probably he is right to do so.
But, I worry about that ” ramping up of vehicle production “. Building more cars…even electric ones…is not what we should be doing with our money and our planet at this time..even if whatever we spend money on grows the economy and makes us all richer, or at least makes the rich richer.
Speaking of which, I may be very late to the party, but it seems to me that making the rich richer crowds out opportunities for a richer life (including but not necessarily mo’ money) for the rest of us. but the herd instinct, and the tribalism of politics, precludes the possibility of us doing anything rational about it.
speaking of “electricity must be produced sustainably! ” I think the only way to produce it sustainably any more it to produce less of it, and I am very fond of smallish electric (and yes, gas) tools that help me build sustainable housing. One thing I have noticed about that lately, is that the small electric tools are often built so badly they don’t justify their cost. This also is a product of new daze economics. The efficiencies of scale result in cheap products that “look like” they could do the job you buy them for, snd, of course, cheap labor that can’t afford monopoly pricing of housing..or better made tools.
Is this “off topic”? I don’t think so, while I am grateful for New Deal Democrat’s reports. I think we need to try to remember what an economy is for, and what the economy we have is doing to us.
Initially, I put up a post referencing a Heinlein story about men working as car crushers doing so on unsold cars coming right off the production line, so as to keep employment up.
I live in a town without public transport, so private cars are necesssary. Two per family minimum, with one as a spare. This makes me sort of uncomfortable really, but so be it. Having only one would make Mrs Fred uncofortable.
But, if we’re going to have all these cars, we’d better figure out how to do it sustainably & pronto. This being way overdue.
couldn’t agree more.
for some reason you Heinlein story appeared after your second comment but at the top of the page. my own comments seem to have veen lost…for a while at least…in the ether too.
my daughter has a three car problem. a big pickup that can haul her horse trailer if she needs to evacuate her horses because of wildfire. doesn’t get much use but pays all the taxes and insurance required by laws that don’t consider actual use. i don’t see solving the need for cars and driving any time soon if ever and the river don’t rise. but i do see using them less as easily attainable and small-slow-short range electric ideal for cities..or reasonable public transportation.
My original ‘Heinlein’ post went into the ‘moderation’ queue.
I love electric vehicles – and was an early adopter
The Guardian – Rowan Atkinson – June 3
But…
It’s an interesting op-ed from Rowan Atkinson (‘Mr Bean’) who trained as an electrical engineer. He has a lot to sat about this issue, so it’s worth a closer look.
At the link, above. The problem with just posting short quotes is that a lot of interesting stuff is left behind.
He does suggest that the real solution is not electric vehicles, but those powered by synthetic petroleum fuels, which seems to ignore the problem created by fuel exhaust. This I doubt. After all, ‘Electric cars ,,, have zero exhaust emissions.’
@Dobbs,
“After all, ‘Electric cars ,,, have zero exhaust emissions.”
Well, at the point of use, yes. But here in Rhode Island, >80% of electricity is generated by burning natural gas, so if you drive an EV in RI, your exhaust emissions are at the power plant. By the time we left Missouri last year, ca. 70% of electricity was generated by burning coal, so if you drive an EV in MO, your exhaust emissions are also at the power plant.
One virtue to EVs is that they are about twice as efficient in converting stored energy into motive force as gas-powered cars. That does reduce somewhat their carbon footprint, but unless you live in a state that gets its electric from nuclear and/or renewables, your EV still has significant emissions.
actually, motor vehicle production was on the order of 25% lower in July; the reason it appeared to be a 5% increase is because there was a 30% upward seasonal adjustment to auto assemblies during the month, when auto manufacturers typically shut down their factories for retooling…if some auto manufacturers cancel their usual shutdowns, or weren’t planning them to start with, that appears as a seasonally adjusted increase in July, even if their production is lower than June’s…
here’s the Fed’s Seasonal Factors for Domestic Auto and Truck Production: https://www.federalreserve.gov/releases/G17/mvsf.htm
trouble is, when you get a boost that’s an artifact of the seasonal adjustment in one month, you’ll usually lose it the next…with a seasonal factor of 111.52% of normal for August, you’ll need a real increase of over 35% in auto production next month for it to even register as a positive in the seasonally adjusted report…
even so, July’s manufacturing was actually lower than what had been reported for June…rather than dollars or widgets produced, the Fed reports industrial production as an index wherein 2017=100…including revisions, the manufacturing index increased by 0.5% to 99.5 in July, after June’s manufacturing index was revised from 99.6 to 99.0, May’s manufacturing index was revised from 99.9 to 99.6, the April manufacturing index was revised from 100.1 to 99.8, and the March manufacturing index was revised from 99.1 to 99.0, and hence the manufacturing index is down 0.7% from a year ago…
moreover, more than half of July’s overall industrial production increase was due to the record temperatures we experienced in July; even after seasonal adjustment, the utility index, which is over 10% of IP, was up 5.4% in July, driven by power generation for air conditioning…i suspect we’ll give that back too if we ever see normal temperatures again..