FxWirePro: Daily Commodity Tracker - 21st March, 2022 
Industrial production rose 0.6% m/m in July, a bit above forecast (0.4%) and consensus expectations (0.3%) as a surge in motor vehicle production and downward revisions to June data boosted the headline reading.June IP was revised down to 0.1% m/m (initial: 0.3%) as manufacturing output is now estimated to have fallen 0.3% m/m (initial: 0.0%). July output for the factory sector was not as strong as the headline data would suggest, however.
Auto manufacturing plants typically shut down for a few weeks in July to retool the assembly lines for next year's model lines. The Federal Reserve's seasonal adjustment factors correct for this on an average historical basis; this year's shutdown was shorter than usual, which resulted in a 10.6% m/m surge in seasonally adjusted motor vehicle and parts output. Adjusting the aggregate data for this surge reveals much more sluggish output in July. Total IP ex vehicles was unchanged on the month (previous: +0.4%) and manufacturing ex motor vehicles and parts rose just 0.1% m/m (previous: 0.0%).
Elsewhere, utilities output fell 1.0% m/m in July (previous: 2.3%) as expected with electricity output down 1.1%. The mining sector posted a modest 0.2% m/m gain in output (0.7%) as oil and gas well drilling expanded for the first time in 10 months (1.3% m/m, previous: -4%). This stabilization is broadly in line with the weekly data on Baker Hughes rotary rig counts. Overall, a stronger dollar and lower energy prices as posing headwinds for industrial output and do not look for a strong rebound in the sector this year.
"The modest rebound in oil and gas well drilling was in line with expectations in July, and leaves our Q3 tracking of investment in this sector little changed. The decline in utilities output also came in line with expectations, and leaves our estimate of household utilities consumption little changed. As a result, our Q2 and Q3 GDP tracking estimates remain unchanged following the report", says Barclays.
