More Manufacturing Green Shoots

The Federal Reserve reported today that industrial production increased 0.5% in July, the first month in the positive realm in 9 months. The automotive sector lead the recovery as a result of the CARS ("Cash for Clunkers") program, but other sectors expanded by 0.2%, with aerospace equipment, computers and electronic products, and plastics leading the way. "Industrial production likely will remain healthy for the rest of the year as companies restock depleted inventories," said Joshua Shapiro, chief U.S. economist for MFR, Inc. The Commerce Department reported last week that wholesale inventories declined 1.7% in June. As an indication of this, AISI reported that steel manufacturing rate of capability utilization was 53.2%, up from a low of 41% early in the spring.

These indications suggest a modest and uneven recovery, but clearly the sector has begun to turn the corner.