Saturday, August 16, 2003

We really need the rest of this story.
U.S. industrial output in July posted its biggest gain since January, boosted by a big gain in utilities output and a third straight monthly rise in factory activity, the Federal Reserve said on Friday.

Production at factories, mines and utilities jumped a larger-than-expected 0.5 percent, the Fed said, its biggest rise since January's 0.7 percent gain. Firms also ran at a faster 74.5 percent of full capacity in July, up from 74.2 percent in June. . . .

factory activity, which accounts for almost 85 percent of total industrial production, rose 0.2 percent. Utilities output surged 3.9 percent as a warmer July spurred demand for electricity while production in the mining sector dipped 0.4 percent.
So, let's get these numbers straight. In July, manufacturing output rose 0.2%. Yet over the same month, manufacturing capacity use rose 0.1%; manufacturing houly earnings rose 0.1% (actually 0.06%, but we're rounding); manufacturing weekly hours (per the BLS's index of aggregate weekly hours) fell 1.1%; and manufacturing employment fell 0.5%.

So we have more output with fewer workers working fewer hours. Increased capital use can only account for a portion of this story, since output has risen 0.64% since April while capacity use is up just 0.3%. The other half of the equation has to be work speed-up. This fits the rising productivity story as well, since capital spending was tanking while productivity growth kept chugging along, as well as the weak wage growth over the last three years, especially in comparison with productivity gains, since the reserve army of the unemployed does its job well of holding wages down and keeping profits up.

The bottom line: this "recovery" is being built off of good old fashioned exploitation.


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