Factory production in the United States grew 0.5% last month, the fastest pace in a year, as mining rebounded and utility use climbed, data from the Federal Reserve showed Aug. 16 in Washington.
Total industrial production jumped 0.7%, more than double the median estimate of economists in a Bloomberg News survey. Utility use increased 2.1%, the same pace as in June, and mining rose 0.7% after a 0.3% drop a month earlier, the report showed.
Manufacturers are finding some relief as oil and commodities prices level out from their plunge and automobile orders remain robust. The outlook is still clouded by uninspiring global growth prospects and lingering uncertainties around the U.K.’s impending exit from the European Union, which could weaken demand for American exporters.
“Autos have been a source of strength over the last several years, but you’re now approaching a sort of steady-state level,” Scott Brown, chief economist at Raymond James Financial Inc. in St. Petersburg, Florida, said before the report. “We’re looking at an outlook where there’s a lot more limited upside to the economy.”
Expectations for manufacturing output, which accounts for about 12% of the economy, ranged from a 0.1% drop to an increase of 0.7% in the Bloomberg survey. The previous month’s reading was revised to a 0.3% increase from a 0.4% gain.
For total industrial production, the Bloomberg survey of 77 economists showed estimates ranging from a 0.2% decline to a rise of 0.8%. The prior month showed a revised 0.4% gain from a previously reported 0.6% increase.
Capacity utilization, which measures the amount of a plant that is in use, increased to 75.9% in July from 75.4% in the prior month.
Demand for utilities climbed as temperatures for the contiguous United States in July were the 14th warmest in records dating to 1895, according to the National Oceanic and Atmospheric Administration.
Factory production of motor vehicles and parts increased 1.9% after a 5.3% rise, the Fed’s report showed.