U.S. INDUSTRIAL PRODUCTION DOWN 0.1%
U.S. FRB - Industrial production edged down 0.1 percent in May after rising 0.9 percent in April. Manufacturing production fell 0.7 percent in May, largely because truck assemblies were disrupted by a major fire at a parts supplier. Excluding motor vehicles and parts, factory output moved down 0.2 percent. The index for mining rose 1.8 percent, its fourth consecutive month of growth; the output of utilities moved up 1.1 percent. At 107.3 percent of its 2012 average, total industrial production was 3.5 percent higher in May than it was a year earlier. Capacity utilization for the industrial sector decreased 0.2 percentage point in May to 77.9 percent, a rate that is 1.9 percentage points below its long-run (1972–2017) average.
The automotive products category within consumer goods, the transit equipment category within business equipment, and the consumer parts category within materials all posted large declines in May because of the lower output of motor vehicles and parts.
Even excluding categories affected by the curtailment for motor vehicles, the indexes for consumer goods and for business equipment decreased 0.4 percent and 0.3 percent, respectively. A drop in the output of consumer energy products accounted for the bulk of the decline for non-automotive consumer goods, while a dip in the index for industrial and other equipment constituted most of the decline for business equipment.
Construction supplies and business supplies both reported small gains, and the index for defense and space equipment increased for a fifth consecutive month. Despite the drop in the output of consumer parts, the overall index for materials advanced, supported largely by continued growth in energy materials.
Manufacturing output moved down 0.7 percent in May but was 1.7 percent higher than its year-earlier level. The indexes for durables and for other manufacturing industries (publishing and logging) each fell more than 1 percent, while the production of nondurable manufacturing was little changed. Within durables, the drop of 6 1/2 percent for motor vehicles and parts was accompanied by decreases of more than 1 percent for primary metals and for electrical equipment, appliances, and components. Within nondurable manufacturing, all industry groups other than chemicals and printing posted declines.
The output of mining rose in May for the fourth consecutive month and was more than 12 percent above its year-earlier level. The rise in the mining index in May reflected continued gains in the oil and gas sector. The index for utilities went up about 1 percent, as a gain for electric utilities outweighed a drop for gas utilities.
Capacity utilization for manufacturing fell 0.6 percentage point to 75.3 percent in May, a rate that is 3.0 percentage points below its long-run average. The operating rate for durables decreased nearly 1 percentage point, and the rate for nondurables edged down. The utilization rate for mining jumped to 92.4 percent, which is about 5 1/2 percentage points higher than its long-run average. The rate for utilities rose about 1/2 percentage point but was still nearly 6 percentage points below its long-run average.
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U.S. EIA - Energy companies’ free cash flow—the difference between cash from operations and capital expenditure—was $119 billion for the four quarters ending June 30, 2018, the largest four-quarter sum during 2013–18 Companies reduced debt for seven consecutive quarters, contributing to the lowest long-term debt-to-equity ratio since third-quarter 2014
OPEC - Total oil demand for 2018 is now estimated at 98.82 mb/d. In 2019, world oil demand growth is forecast to rise by 1.41 mb/d. Total world oil demand in 2019 is now projected to surpass 100 mb/d for the first time and reach 100.23 mb/d.
ARAB NEWS - Oil exports from southern Iraq are heading for a record high this month, two industry sources said, adding to signs that OPEC’s second-largest producer is following through on a deal to raise supply and local unrest is not affecting shipments.
PLATTS - The International Energy Agency expects the US to account for 75% of the global growth in natural gas exports over the next five years, a bullish outlook for LNG developers facing challenges at home getting projects off the ground and abroad with tariffs affecting trade flows.