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7/16/2014 8:50:00 AM Write a Letter to the Editor Write a letter to the Editor

Industrial Production Increased 0.2% in June, Fed Says

Mack Trucks Inc.

Industrial production climbed 0.2% in June, capping the strongest quarter in almost four years and indicating manufacturers are providing a bigger spark for the U.S. economy.

The gain in output at factories, mines and utilities last month followed a revised 0.5% advance in May, figures from the Federal Reserve showed.

The median forecast in a Bloomberg News survey of economists called for a 0.3% advance. Production rose at a 5.5% annualized rate from April through June, the most since the third quarter of 2010.

Producers have received more orders as households boost spending and companies grow more optimistic about expanding and rebuilding inventory. A pickup in overseas markets would mean busier assembly lines, further propelling manufacturing and the economy in the second half of the year.

“Business investment is going to accelerate in the second half of this year,” Ryan Sweet, senior economist at Moody’s Analytics Inc. said. “Businesses are running out of excuses for why they’re not investing more aggressively.”

Estimates of the 82 economists surveyed by Bloomberg ranged from a drop of 0.1% to an increase of 0.6% after a previously reported May gain of 0.6%.

Manufacturing, which makes up 75% of total production, grew 0.1% in June, less than forecast as automakers cut back and factories slowed output of nondurable goods such as energy and clothing. The median projection in the Bloomberg survey called for a 0.3% June increase.

In the second quarter, factory production advanced at a 6.7% annualized rate, the fastest since the first three months of 2012.

“Things slowed down a little bit in June,” Sweet said. “The auto plant production schedules point to a pickup in auto manufacturing over the next couple of months.”

The Fed report also showed that capacity utilization, which measures the amount of a plant that is in use, held at 79.1% in June.

Utility output fell 0.3% after a 0.4% decline the previous month. Mining production, which includes oil drilling, increased 0.8 %.

By Bloomberg News

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