U.S. industrial production grows below expectations in July

U.S. industrial production grew below expectations in July. Industrial production rose 0.2 percent sequentially in the month, as compared with the consensus expectations of 0.3 percent rise. The July print has also come below the prior month’s growth of 0.4 percent. The below expectations print was mainly due worse-than-expected motor vehicle production that dropped 3.6 percent sequentially. Manufacturing production was weak mainly because of vehicle and machinery production, which countered the rises in computer, electronics and other manufacturing components. Utilities production grew strongly by 1.6 percent, while mining rose 0.5 percent.

Motor vehicles and parts has dropped for three straight months and is down 5 percent year-on-year. The recent softness in motor vehicle production shows the ongoing adjustment in the auto industry where the inventory overhang is being a drag on prices and production.

Demand for autos is decelerating, which is likely because of the elimination of pent-up demand after the recession and because of modestly tighter credit conditions more recently, noted Barclays in a research report. However, the deceleration in autos reflects a shift in industry preference away from high production at any cost to a better balance between quantity and quality of sales and the recent weakness in auto production data shows that shift, stated Barclays.

“Our Q3 GDP tracking estimate rose one-tenth to 2.6% q/q saar after the July IP data. Stronger than expected utilities output boosted our PCE tracking estimate by one-tenth to 2.7% q/q saar”, added Barclays.

At 17:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at -22.5213. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest