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August 14, 2015 10:05 AM, EDT

Factory Production Rises on Record Vehicle Assembly

Tim Boyle/Bloomberg News

Factory production rose more than economists forecast in July on record automobile assembly, indicating American manufacturing is regaining its footing after a slowdown.

The 0.8% increase was the biggest since November and followed a revised 0.3% decline in the prior month, the Federal Reserve reported Aug. 14. Total industrial output, which includes mines and utilities, climbed 0.6% as oil drilling rose for the first time since September.

Rising purchases of automobiles and a broad-based increase in retail sales in July signal assembly lines may remain busy in  the second half of 2015. Improving U.S. demand will help cushion factories from weakening global markets, the stronger dollar and the slump in oil prices.

“A rebounding manufacturing sector is indicative of improvement in broader economic activity,” Gennadiy Goldberg, U.S. strategist at TD Securities in New York, said before the report. “We look for stronger new orders in the coming months.”

Industrial production in June advanced by a revised 0.1%.

Utility output decreased 1% after a 2.3% rise the previous month.

Mining production, which includes oil drilling, increased 0.2% after climbing 0.7%. Oil and gas well drilling jumped 1.3% after a 4% plunge in June.

The median forecast in a Bloomberg News survey of economists called for a 0.4% gain in factory output and a 0.3% gain in total industrial production.

For manufacturing, which makes up 75% of total production and accounts for about 12% of the economy, the June reading was revised from no change.

Capacity utilization advanced to 78% from 77.7% the previous month, the report showed.