Auto plants, clothing makers and plastics factories drove a sharp rebound in U.S. manufacturing in July.
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He further said: “The big July increase in industrial production is further proof that the U.S. economy is expanding at an above-trend pace in mid-2015, after a weak start to the year tied to bad weather and the West Coast ports labor dispute”. The slowdown continued into the spring, as orders for equipment and machinery suffered by the rising value of the dollar cutting exports overseas and lower oil prices reducing orders from energy firms.
Much of the improvement came from motor vehicle output, which surged 10.6 per cent in July. Utilities output declined by 1.0 percent on the month, but increased 4.6 percent from last July.
The median forecast in a Bloomberg survey of economists called for a 0.4 percent gain in factory output and a 0.3 percent gain in total industrial production. Capacity utilization increased from 77.7 percent in June to 78.0 percent in July. In contrast, miscellaneous durable goods (down 1.6 percent), machinery (down 1.3 percent), textile and product mills (down 1.3 percent) and petroleum and coal products (down 0.9 percent) output were lower for the month. Winter storms slowed and even stopped some assembly lines in January and February.
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Falling oil prices have also dragged down factory output. The decline has forced energy firms to curtail drilling, eliminating much of the need for new pipelines and equipment that had boosted factory orders in previous years when prices were closer to $100 a barrel. Other indicators show evidence of increased consumer demand that could help support broader economic growth. This was the second consecutive monthly gain. Mining, which includes oil and gas wells, increased 1 percent in June. (Note that the data were also updated with a new base year, changing it from 2007=100 to 2012=100.) Capacity utilization for manufacturers increased from 75.7 percent to 76.2 percent.
