US Industrial Production Climbs More Than Expected In July

“A rebounding manufacturing sector is indicative of improvement in broader economic activity”, Gennadiy Goldberg, U.S. strategist at TD Securities LLC in New York, said before the report.

Manufacturing production rebounded strongly in July, up 0.8 percent, but those gains came from a June that was revised lower, down 0.3 percent. This would mean that the Fed report exaggerated the gains in motor vehicle output last month and that auto production might dip in August. Auto sales jumped 5 per cent to 1.5 million, with luxury brands such as Acura, Audi, Infiniti, Lincoln and Volvo accounting for the biggest gains. 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. Economists had expected production to increase by about 0.4 percent.

Capacity utilisation in the factory sector rose to 76.2 per cent last month, its highest level since December, from a revised 75.7 per cent in June. Winter storms slowed and even stopped some assembly lines in January and February.

Over the past 12 months, manufacturing output has risen 1.5 per cent. That sharp increase has led to pricier U.S. goods around the world, hurting exports and orders. Lower oil prices, which slowed orders from energy firms, also reduced output.

Mining production, which includes drilling for crude oil, was the only category down year-on-year, at -2%.

Utility output decreased 1 percent after a 2.3 percent rise the previous month. This was the second consecutive monthly gain.

Industrial production in June advanced by a revised 0.1 percent.

A key category that serves as a proxy for business investment plans edged up 0.7 percent after declines in April and May. “Economic growth in the last three quarter of this year should be about 3 percent at an annual rate”.