The output of motor vehicles and parts decreased 1.7% after a 1.2% gain a month earlier, today’s report showed. Excluding autos and parts, manufacturing was unchanged after a 0.1% increase.
Even so, the automobile industry is underpinning an improved longer-term outlook. Cars and trucks sold at a 15.7 million annualized rate last month after a 15.8 million pace in June, the strongest back-to-back readings since the end of 2007, figures from Ward’s Automotive Group showed. GM, Ford Motor Co., Chrysler Group LLC, and Honda Motor Co. are among carmakers that plan to boost capacity.
Details of the industrial production data released today also showed machinery production fell 1% after rising 1.5%, and construction materials rose 0.5% for the second month. Output of computers and electronics fell 0.1%.
Consumer goods production dropped 0.5%, while output of business equipment was unchanged.
Orders in the U.S. are improving going into the second half, said Louis Chenevert, chairman and chief executive officer of United Technologies, the Hartford, Connecticut-based maker of Pratt & Whitney engines and Otis elevators.
“The housing market, for example, for us has been robust this year,” Chenevert said at an Aug. 13 conference. “When you sell furnaces in June, July, it’s a good sign. That means there is new construction.”
In addition, “Europe looks like it’s maybe bottomed out. China continues to be robust for us. India offers us some nice opportunity,” along with South America and Russia, he said.
The euro-area economy emerged from a record-long recession in the second quarter, led by Germany and France. Gross domestic product in the 17-nation euro area rose 0.3% in the April-June period after a 0.3% contraction in the prior three months, the European Union’s statistics office in Luxembourg said yesterday.
The U.S. economy may expand at a 2.3% annualized pace in the third quarter, after growing at a 1.7% rate in the prior three months, according to a Bloomberg survey of economists from Aug. 2 to Aug. 6.
Retail sales rose in July for a fourth consecutive month, showing American households are regaining momentum as employment climbs. Purchases of new U.S. homes rose in June to the highest level in five years, signaling gains in residential construction that will support production of related goods, from furniture to appliances.