Manufacturing, mining power US industrial production
WASHINGTON: 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 the second quarter.
But the outlook for the industrial sector is uncertain against the backdrop of escalating trade tensions between the United States and its major trade partners, which threaten to disrupt global trade. A strong dollar and shortage of workers also pose a risk to production, with factory surveys suggesting some strain in the supply chain.
“Time will tell if this disruption in foreign trade will slow the overall US economy because manufacturers cannot get what they need to produce goods here for domestic consumption and for exports,” said Chris Rupkey, chief economist at MUFG in New York.
The Federal Reserve said on Tuesday industrial production rose 0.6 per cent last month after falling 0.5 per cent in May. It accelerated at a 6.0 per cent annualised rate in the second quarter after a 2.4 per cent growth pace in the first quarter.
Manufacturing output surged 0.8 per cent in June after decreasing 1.0 per cent in May. A 7.8 per cent jump in motor vehicle production buoyed manufacturing output last month. Motor vehicle production declined 8.6 per cent in May after a fire at a parts supplier caused a sharp drop in the assembly of trucks.
Excluding motor vehicles, manufacturing production rose 0.3 per cent in June. Manufacturing, which accounts for about 12 per cent 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.
Strong industrial production and retail sales, together with smaller trade deficits in April and June suggest economic growth accelerated sharply in the second quarter.
Gross domestic product estimates for the April-june quarter are as high as a 5.3 per cent rate, more than double the first quarter’s 2 per cent pace.
The dollar was trading higher against a basket of currencies. Stocks on Wall Street rose as did prices for US Treasuries.
Manufacturing output increased at a 1.9 per cent rate in the second quarter after growing at a 1.7 per cent pace in first quarter. In June, there was an increase in the production of wood, computer and electronic products as well as aerospace and miscellaneous transportation equipment.