INDUSTRIAL OUTPUT surges, but full recovery far off.

But full recovery still long way off

WASHINGTON — Production at America’s factories and utilities surged last month but remained well below pre-pandemic levels.

The Federal Reserve said Wednesday that U.S. industrial production rose 5.4% in June, the second-straight monthly gain after a 1.4% uptick in May. But it was still 10.9% below the level in February, before the economy virtually shut down in the face of the coronavirus.

The June performance was better than economists had forecast and reflected the reopening of many parts of the U.S. economy after lockdowns in the spring.

Total production was boosted by a robust upturn in “manufacturing output as producers, particularly in the auto sector, reopened factories to catch up with the surprisingly strong initial rebound in consumption,” Michael Pearce, senior U.S. economist at Capital Economics, said in a note. “With high-frequency indicators suggesting the latter is now losing pace, future gains in production look set to be more muted too.”

Despite the gains in May

and June, industrial production dropped at a 42.6% annual rate in the second quarter, the worst since the American economy demobilized in the aftermath of World War II. Industrial production had plunged 12.7% in April.

Factory production jumped 7.2% in June. Production of cars and auto parts surged 105%. Still, auto industry output remains nearly 25% below February levels.

Production at utilities climbed 4.2% last month as the rebounding economy drove up demand for power. But mining output sank 2.9%, the fifthstraight monthly drop, pulled down by plummeting oil and gas production. Oil- and gaswell drilling declined 18% after a 36.9% slide a month earlier. Drilling is down 70% from a year ago after a slump in oil prices several months ago prompted cutbacks in exploration.

The rebound in industrial production may not last. A resurgence in coronavirus cases is forcing governors in the South and West to pause or reverse the economic reopening.

“The road to a full recovery will be much slower compared to the initial strong bounce of the past two months that was prompted by the relaxation of social distancing measures,” Oren Klachkin and Gregory Daco of Oxford Economics wrote in a research note. “The virus’ resurgence in many states in recent weeks has already led to the re-imposition of social distancing measures that will drag on the recovery and bolster already significant headwinds facing the industrial sector.”

Capacity utilization, which measures the amount of a plant in use, increased to 68.6% from a revised 65.1% in May; it was 76.8% in February. Extra capacity can weigh on corporate profits because business capital is underutilized, and it also signals a sluggish capital spending outlook.

Information for this article was contributed by Paul Wiseman of The Associated Press and by Olivia Rockeman of Bloomberg News.