US Industrial Production during the 12 months through July was up 3.2% from the same period one year ago. Activity is rising at an accelerating pace in each of the three major components. The largest, US Total Manufacturing Production, was up 2.2%. Meanwhile, US Mining Production was up 10.6%, and US Electric and Gas Utilities Production was up 2.8%. Growth in US Industrial Production will persist through the remainder of 2018, although we expect the pace of rise to slow by the end of the year. Plan for mild contraction in 2019.
The US industrial economy is benefiting from accelerating growth in Exports, which were up 8.1% on a year-over-year basis. However, the US dollar is strengthening, which signals that Production will transition to the back side of the business cycle in the near term as the benefits of a weakened dollar fade for Exports. Retaliatory tariffs implemented by major trade partners such as China, Canada, and Mexico also pose a downside risk to Exports. We are monitoring these developments closely and will provide updates to our outlooks as more information becomes available.