Posted by Marcelo Perez

US industrial production, output at the nation’s factories, mines, and utilities, decreased a better-than-expected 0.4% in the month of June, after falling a hefty 1.2% the previous month, according to the Federal Reserve. After declines in 8 straight months, and 17 of the last 18 months, production has decreased 13.6% in the past year, an astonishing number.

The report was slightly above estimations, as economists were expecting a 0.6% decrease in output.

Capacity utilization, a key gauge of inflationary pressures, came in at a new record low of 68.0%, dropping from 68.2% in May. The number is more than 12 percentage points below its average level from 1972 to 2007. Lower capacity usually leads to slower inflation, as producers compete with each other for work.

Report Details (via MarketWatch):

Declines in output were widespread in June but in all cases smaller than in May. The only gain came in output for utilities. The output of non-industrial supplies was flat.

Manufacturing output fell 0.6% in June after a 1.1% drop in the prior month.

Consumer goods production fell 0.3% in June after falling 1.1% in May.

Output of consumer durables fell 1% in June and was down 6.8% in the second quarter, a much smaller decline than the 40.7% drop in the first quarter.

Non-durables edged down 0.1% in June.

The production of automotive products decreased 2.6% in June after an 8.2% decline in May.

Excluding motor vehicles and parts, production fell 0.3%.

The index for business equipment output fell 0.8%, a more moderate decline than the 1.9% drop in May.

The output of construction supplied fell 0.2% in June after a 0.4% drop in May.

Materials output fell 0.6% in June. The index dropped 1.3% in the prior month.

The output of utilities rose 0.8% in June.

Read the Full Report.