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Manufacturing in the US gains more than forecast in June
[WASHINGTON] Manufacturing in the US last month posted the strongest advance since January, helped by automobile production and a sign domestic demand is improving.
The 0.4 per cent gain at factories, which make up 75 per cent of total industrial production, followed a 0.3 per cent decline in May, a Federal Reserve report showed on Friday in Washington. The median forecast in a Bloomberg survey of 25 economists called for a 0.3 per cent rise. Total industrial production, which also includes mines and utilities, jumped 0.6 per cent, also exceeding the median forecast and the biggest gain in almost a year.
Stabilization in oil and commodities prices and the fading drag from a stronger dollar are allowing manufacturers to find their footing. Trimmer inventories and a pickup in household demand will underpin factory activity, at the same time the fallout from the UK's impending exit from the European Union poses a hurdle for American companies that sell overseas.
"As growth in consumer demand starts filtering through into the production front, we should see an improvement in manufacturing," Jennifer Lee, a senior economist at BMO Capital Markets in Toronto, said before the report. "It's still going to be a slow process." Manufacturing accounts for about 12 per cent of the economy. Economists' estimates in the Bloomberg survey ranged from unchanged to an advance of 0.6 per cent for factory output. The previous month's reading was revised from a drop of 0.4 per cent.