The 1 percent gain at manufacturers followed a 0.3 percent increase in the prior month that was more than initially estimated, figures from the Federal Reserve in Washington showed today. Total industrial production, which also includes mines and utilities, advanced 0.4 percent for a second month in July.
Production lines have shifted into higher gear as Americans replace aging autos and companies grow more confident about expanding. Stronger demand in overseas markets, which has been a missing ingredient for American producers, would help provide additional momentum.
“We’re seeing a strengthening,” Mike Englund, chief economist at Action Economics LLC in Boulder, Colorado, said before the report. “The factory sector has looked quite solid this year.”
Stock-index futures held earlier gains after the figures, with the contract on the Standard & Poor’s 500 Index expiring in September rising 0.3 percent to 1,958.3 at 9:19 a.m. in New York.
Total industrial production was projected to rise 0.3 percent, according to the median forecast in a Bloomberg survey of 82 economists. Estimates ranged from a drop of 0.4 percent to an increase of 0.7 percent after a previously reported June gain of 0.2 percent.
Manufacturing, which makes up 75 percent of total production, was forecast to increase 0.4 percent, according to the survey median.
Auto production soared 10.1 percent in July, the biggest gain since July 2009, after no change a month earlier. Factory output excluding vehicle and parts production climbed 0.4 percent, the most in four months.
Production of business equipment jumped 1.3 percent, the most since February. Output of machinery, computers, electronics and transportation equipment increased during the month.
Factories were also churning out more consumer goods. In addition to more motor vehicles, output of appliances, furniture and home electronics picked up.
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 57.1 last month, the highest reading since April 2011, the Tempe, Arizona-based group reported August 1. Readings above 50 signal expansion.