US factory production shows gain outside autos

The results bolster the view of a secondquarter rebound in economic growth

US factory production regained its footing in April to push capacity utilisation to the highest since 2015, indicating the industry will support economic growth this quarter, Federal Reserve data showed yesterday.

The gain in factory output was broad-based outside of a decline in motor vehicles and parts. Several categories posted increases of more than 1 per cent, including machinery; computer and electronic products; electrical equipment and appliances; and aerospace and miscellaneous transportation.

The factory-use rate rose to 75.8 per cent — the highest since August 2015 — from 75.5 per cent a month earlier. Even so, that’s still 2.5 percentage points below its long-run average.

The results bolster the view that the industry, along with consumer spending, will contribute to a projected secondquarter rebound in economic growth. Tax cuts and steady overseas sales are expected to underpin gains in business investment. At the same time, rising prices for materials and tariffs on imported metals, along with US-China trade tensions, pose risks for American manufacturers.

Automobile and parts production decreased 1.3 per cent after two months of strong gains, the Fed’s report said. That’s consistent with government figures based on industry reports and released earlier, which showed motorvehicle sales cooled in April.