U.S. factory productions exceed outlooks, suggesting Q2 recovery
Date
7/18/2024 5:17:34 AM
(MENAFN) U.S. factory output exceeded expectations in June, marking a significant contribution to a robust rebound in industrial production for the second quarter, despite ongoing challenges posed by high borrowing costs. The Federal Reserve reported on Wednesday that factory output increased by 0.4 percent last month, following an upwardly revised 1 percent gain in May. Economists, who had anticipated a 0.2 percent rise based on a poll, were pleasantly surprised by the stronger-than-expected performance following a 0.9 percent jump in May. Compared to a year earlier, factory output saw a 1.1 percent increase in June.
For the second quarter as a whole, factory output expanded at an annual rate of 3.4 percent, a stark improvement from the 1.3 percent decline observed in the first quarter of the year. Despite these gains, the manufacturing sector, which accounts for 10.4 percent of the U.S. economy, has faced headwinds due to elevated interest rates that have dampened demand for goods and complicated capital investment.
There is cautious optimism regarding a potential recovery in factory activity, bolstered by expectations that the U.S. Federal Reserve will initiate a cycle of monetary policy easing starting in September, spurred by declining inflationary pressures. In June, output of motor vehicles and parts rose by 1.6 percent, rebounding from no change in May. Durable goods manufacturing output remained unchanged, while declines in fabricated metal products and miscellaneous goods offset gains in sectors such as vehicles and parts, as well as electrical equipment, appliances, and components. Non-durable manufacturing output increased by 0.8 percent.
In the broader industrial sector, mining output saw a modest increase of 0.3 percent in June, recovering from a 0.7 percent decline in May. Utilities output also showed strong growth, rising by 2.8 percent following a 1.9 percent gain in the previous month. Overall, industrial production expanded by 0.6 percent in June, following a 0.9 percent rise in May.
Year-on-year, industrial production in June rose by 1.6 percent, with the second quarter registering a notable 4.3 percent increase. These figures underscore the resilience and recovery potential of the U.S. industrial sector amid evolving economic conditions and monetary policy adjustments.
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