US manufacturing output beats expectations with 0.4% rise in June
PRODUCTION at US factories increased more than expected in June, contributing to a solid rebound in output in the second quarter, though higher borrowing costs remain a constraint for the manufacturing industry.
Factory output rose 0.4 per cent last month following an upwardly revised 1.0 per cent increase in May, the Federal Reserve said on Wednesday (Jul 17).
Economists polled by Reuters had forecast factory output would advance 0.2 per cent after a previously reported 0.9 per cent jump in May. Production at factories shot up 1.1 per cent on a year-on-year basis in June.
It increased at a 3.4 per cent annualised rate in the second quarter, rebounding from the 1.3 per cent pace of decline in the January-to-March quarter.
Manufacturing, which accounts for 10.4 per cent of the economy, has at best been treading water as higher interest rates curb demand for goods and make capital investment challenging.
There is, however, optimism that activity at factories could pick up, with the US central bank expected to start its monetary policy easing cycle in September amid subsiding inflation.
Motor vehicle and parts output rose 1.6 per cent last month after being unchanged in May. Durable goods manufacturing production was unchanged. Increases in the output of motor vehicles and parts as well as electrical equipment, appliances and components were offset by declines in fabricated metal products and miscellaneous goods.
Nondurable manufacturing production increased 0.8 per cent.
Mining output rose 0.3 per cent after falling 0.7 per cent in May. Utilities production increased 2.8 per cent. That followed a 1.9 per cent rise in the prior month. Overall industrial production advanced 0.6 per cent in June after gaining 0.9 per cent in May.
Industrial production rose 1.6 per cent on a year-on-year basis in June. It increased at a 4.3 per cent rate in the second quarter.
Capacity utilisation for the industrial sector, a measure of how fully firms are using their resources, rose to 78.8 per cent from 78.3 per cent in May. It is nine-tenths of a percentage point below its 1972-2023 average.
The operating rate for the manufacturing sector climbed to 77.9 from 77.6 per cent in the prior month. It is four-tenths of a percentage point below its long-run average. REUTERS
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