Factory Production Increased More Than Forecast in July

US factory production increased by 0.8 percent in July, marking a strong recovery after a 0.3 percent decline in the previous month, the Federal Reserve reported Friday.

Factory production rose more than economists forecast in July on record automobile assembly, indicating American manufacturing is regaining its footing after a slowdown.

Mining production edged up 0.2 per cent, while utilities production fell 1.0 per cent. The prior June 0.05 percent after-inflation monthly increase was revised down to a 0.30 decline, and May’s 0.13 percent advance is now judged to have been only 0.09 percent.

At 107.5 percent of its 2012 average, total industrial production in July was 1.3 percent above its year-earlier level.

“Industrial production is turning around after weakness in early 2015”, said Stuart Hoffman, chief economist at PNC Financial Services.

Food prices dipped 0.1 percent in July on a sharp drop in egg prices, which had surged in recent months.

“We continue to see a stronger dollar and lower energy prices as posing headwinds for industrial output and do not look for a strong rebound in the sector this year”, said Jesse Hurwitz, an economist at Barclays in New York.

Output at clothing and leather factories rose 1 per cent last month, as did the manufacturing of plastics and rubber products.

U.S. stocks were trading marginally higher, while the dollar was little changed against a basket of currencies. The PPI gained 0.4 percent in June. This is a slight uptick from June’s reading of 0.3 percent. It was the sixth straight 12-month decrease in the index.

Mining production, which includes oil drilling, increased 0.2 percent after climbing 0.7 percent.

On a year-on-year basis, inflation-adjusted non-durable goods output climbed by 2.04 percent in July – the same as June’s downwardly revised number. The Federal Reserve will also be releasing the capacity utilization rate, which is expected to show a slight weakening to 78.1 percent in July versus 78.4 percent in June. The so-called core PPI was up 0.9 percent in the 12 months through July.