Industrial production climbed 0.2 percent 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 percent advance in May, figures from the Federal Reserve showed today in Washington. The median forecast in a Bloomberg survey of economists called for a 0.3 percent advance. Production rose at a 5.5 percent 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. in West Chester, Pennsylvania, said before the report. “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 percent to an increase of 0.6 percent after a previously reported May gain of 0.6 percent.
Stock-index futures held gains amid deals and earnings reports, while data showed economic growth in China topped forecasts. The contract on the Standard & Poor’s 500 Index expiring in September rose 0.4 percent to 1,976.3 at 9:18 a.m. in New York.
Manufacturing, which makes up 75 percent of total production, grew 0.1 percent 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 percent June increase.
In the second quarter, factory production advanced at a 6.7 percent 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.”
Other data on manufacturing, which accounts for about 12 percent of the economy, show sustained progress. The Institute for Supply Management’s factory index was 55.3 last month, little changed from a five-month high of 55.4 in May, the Tempe, Arizona-based group reported July 1. Readings above 50 signal expansion. The ISM’s gauge of orders climbed to the highest level of the year.
Today’s Fed report also showed that capacity utilization, which measures the amount of a plant that is in use, held at 79.1 percent in June.
Utility output fell 0.3 percent after a 0.4 percent decline the previous month. Mining production, which includes oil drilling, increased 0.8 percent.
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