Factory Output Up More Than Estimated, Autos Advance

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US manufacturing output accelerated in June, climbing for the 2nd month running, thanks in large part to increased production of motor vehicles and parts.

The Federal Reserve said Tuesday manufacturing production rose 0.4% last month, above the 0.2% expected by analysts in a poll.

The June numbers were stronger than the 0.2% growth seen in May, which had been the 1st growth of 2019 after several months of manufacturing declines or unchanged conditions.

The data could ease lingering concerns about the strength of the US factory sector in the face of a slowing global economy. The June gains were the largest for the sector since December.

Despite recent monthly gainers, the manufacturing sector is down 2.2% for Q-2, its biggest Quarterly decline since Q-2 of Y 2016.

The Fed said the manufacturing boost was significantly driven by a 2.9% increase in motor vehicle and parts production. Without it, manufacturing output only grew 0.2%.

Overall, industrial production was unchanged in June, and was down 1.2% for Q-2, the 2nd consecutive Quarterly decrease.

Note: Overall capacity utilization dropped to 77.9% in June, and stands 1.9% below its 1972-2018 average.

Officials at the Fed tend to look at capacity use measures for an indication of how much more the economy may be able to grow before inflation becomes a concern.

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