US Industrial Production Driving Economy

US Industrial Production Driving Economy

US Industrial Production Driving Economy

US industrial production increased in June, boosted by a sharp rebound in manufacturing and further gains in mining output, the latest sign of robust economic growth in Q-2.

But, a strong USD and shortage of workers pose a risk to production, with factory surveys suggesting some strain in the supply chain.

The Federal Reserve said on Tuesday industrial production rose 0.6% last month after falling 0.5% in May. It accelerated at a 6.0% annualized rate in the second quarter after a 2.4 percent growth pace in the first quarter.

Manufacturing output surged 0.8% in June after decreasing 1.0% in May.

A 7.8% in motor vehicle production buoyed manufacturing output last month. Motor vehicle production declined 8.6% in May after a fire at a parts supplier caused a sharp drop in the assembly of trucks.

Ex motor vehicles, manufacturing production rose 0.3% in June.

Manufacturing, which accounts for about 12% of the economy, is being supported by a strong domestic and global economy. The data came on the heels of a report on Monday showing retail sales not only rose solidly in June, but were much stronger than previously reported in May.

GDP estimates for Q-2 are as high as a 5.3% rate, more than 2X Q-1’s 2% pace.

Stocks on Wall Street rose, US Treasuries finished flat to Unchanged.

Officials at the Fed tend to look at capacity use measures for signals of how much “slack” remains in the economy or how far growth has room to run before it becomes inflationary.


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