A solid recovery in US manufacturing, particularly vehicles, after two months of contraction is helping to boost overall industrial production in July, the Federal Reserve said on Tuesday.
A massive 6.6 percent increase in motor vehicle and parts production was a key factor behind the 0.7 percent increase in manufacturing, the largest gain since March, the data showed.
As a result, total industrial production rose 0.6 percent last month, twice the economists’ consensus forecast.
The gain came in contrast to the massive decline in a regional New York Fed survey for the first week of August that briefly spooked investors on Monday.
“Production activity is cooling down but maintaining some dynamism; no sign of a massive pullback,” said Gregory Daco, chief economist at EY Parthenon.
“I would downplay the huge drop in the Empire State survey and focus on the ISM readings, which point to cooling activity,” Daco said on Twitter, referring to a nationwide survey that showed slowing but sustained growth over the past month showed.
Mining output also rose 0.7 percent on “gains in coal mining and oil and gas drilling,” while utilities fell 0.8 percent, the Fed said.
Total production was 3.9 percent higher compared to July 2021, while manufacturing increased by 3.2 percent, the report said.
Utilized industrial capacity slipped slightly over 80 percent to 80.3 percent after falling below that threshold in June.
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