June Industrial Production and Capacity Utilization (And Why You Should Care)

The Federal Reserve reported that U.S. Industrial Production for the month of June was reported at +0.2%, which was a tenth below the consensus expectations for +0.3% and well above last month's revised reading of +0.5% (April: -0.3%, Mar: +0.9%, Feb: +1.2%). The nation's factories reported that Capacity Utilization came in at 79.1%, which was below the expectations for a reading of 79.3% but was in line with last month's reading of 79.1% (April: 78.6%, Mar: 79.3%, Feb: 78.8%). Recall that May's reading on Capacity Utilization of 79.3% was the best since June 2008. Why should you care about this data? Wage inflation is an important component of the Consumer Price Index. And history shows that inflation has been one of the leading causes of death to bull markets in stocks. Therefore, we watch the level of capacity utilization for signs of tightness in the labor markets.