U.S. factory output beat forecast in June, pointing to robust rebound in Q2
Date
7/18/2024 4:18:45 AM
(MENAFN) In June, U.S. factory output increased more than anticipated, contributing to a robust rebound in the second quarter despite ongoing challenges from high borrowing costs. According to the Federal Reserve, factory output rose by 0.4 percent last month, following a revised 1 percent increase in May. Economists had predicted a smaller rise of 0.2 percent after a 0.9 percent increase in May. Year-over-year, factory output increased by 1.1 percent in June.
During the second quarter, factory output grew at an annual rate of 3.4 percent, a significant recovery from the 1.3 percent decline seen in the January-March quarter. The manufacturing sector, which constitutes 10.4 percent of the U.S. economy, has faced a slowdown due to higher interest rates that have dampened demand for goods and made capital investment more challenging. However, there is optimism for a potential recovery in factory activity as the Federal Reserve is expected to begin easing monetary policy in September, in response to easing inflation.
In June, motor vehicle and parts production saw a 1.6 percent increase after remaining unchanged in May. While the output of durable goods remained steady, declines in fabricated metal products and miscellaneous goods offset gains in vehicle and parts production as well as in electrical equipment, appliances, and components. Nondurable manufacturing output rose by 0.8 percent. Additionally, mining output increased by 0.3 percent following a 0.7 percent decline in May, and utilities output rose by 2.8 percent, building on a 1.9 percent gain the previous month. Overall industrial production increased by 0.6 percent in June after a 0.9 percent rise in May, marking a 1.6 percent year-on-year increase in June and a 4.3 percent rise in the second quarter.
The capacity utilization rate in the industrial sector, which measures how fully companies are using their resources, increased to 78.8 percent from 78.3 percent in May, though it remains 0.9 percentage points below the historical average from 1972 to 2023. The manufacturing employment rate also rose to 77.9 percent from 77.6 percent the previous month, still 0.4 percentage points below its long-term average.
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