U.S. Industrial Production Rises 0.8%, Biggest Increase Since October 1999
U.S. Industrial Production Rose 0.8% in June; Plant-Use 76.1%
By Siobhan Hughes and Monee Fields-White
Washington, July 16 (Bloomberg) -- U.S. industrial production rose in June by the largest amount since October 1999 as factories turned out more autos and utilities increased power generation, the Federal Reserve reported.
The 0.8 percent rise in work performed at factories, mines and utilities was larger than expected and followed a 0.4 percent gain in May that was larger than previously reported. Manufacturing, which accounts for 90 percent of the report, rose 0.7 percent after rising 0.5 percent. The increases in total production and for manufacturing were the sixth in a row.
General Motors Corp. built 14 percent more vehicles in North America during the second quarter than a year earlier, the world's largest automaker reported today. A weakening dollar may also be helping exports of a range of manufactured goods. That helps explain why economists expect the recovery to keep going even as falling stock prices threaten the outlook for growth.
``Manufacturing is picking up pretty substantially,'' said Drew Matus, an economist at Lehman Brothers Inc. in New York, before the report. ``Low inventories are playing a role, especially in the auto sector. You had decent auto sales in June, which came on top of lean inventories, so automakers are going to have to make up the difference.''
Economists had expected a 0.5 percent rise in industrial production, based on the median of 57 forecasts in a Bloomberg News survey, after a previously reported increase of 0.2 percent for May.
Greenspan Testimony
Fed Chairman Alan Greenspan today will speak about the state of the economy during a semi-annual report to Congress. The U.S. is rebounding from last year's recession, Greenspan has said often this year. Economists expect him to address the threat posed by slumping stocks and falling confidence in U.S. corporations to that recovery, and they are looking for indications that the Fed will hold down interest rates.
The plant-use rate rose to 76.1 percent, the highest since August 2001, from 75.6 percent in May. That is up from an almost 19-year low of 74.4 percent in December and still well below the average 81.8 percent rate during the record expansion from March 1991 to March 2001.
At factories, production of consumer durable goods rose 0.8 percent, led by autos and consumer electronics. Manufacture of motor vehicles and parts rose 2.5 percent after falling 0.9 percent. General Motors said its second-quarter net income more than doubled as the company built more vehicles than a year earlier and offered discounts to bolster sales.
Production of non-durable consumer goods, which include food, clothing, chemical products and paper, rose 0.7 percent after falling 0.1 percent.
Business Equipment
Rohm & Haas Co., which makes chemicals used in paint and household goods, said last month that its second-quarter profit will be higher than earlier forecasts because of rising demand for its chemicals used in consumer products and semiconductor manufacturing.
Chairman Raj Gupta still said that he was ``cautious'' about full-year projections because he doesn't know whether demand will continue at current rates.
General Electric Co., the world's biggest company by market value, projects sales will rise by 8 percent to 10 percent this quarter, partly because of gains at its plastics and appliances units. Some investors view the company as a proxy for the economy because of its broad range of businesses, which span manufacturing, finance and consumer goods.
Production of business equipment rose 0.2 percent after rising 0.1 percent. Production of semiconductors and related parts rose 2.4 percent after rising 4.4 percent.
Production of computers and office equipment rose 0.8 percent. Production of communications equipment increased 0.6 percent.
Utility Production Increases
Production at utilities rose 1.6 percent after falling 0.9 percent, as a heat wave across much of the U.S. boosted demand for electricity to run air-conditioners. Temperatures reached 107 degrees Fahrenheit in Phoenix in mid-June. At the start of July, temperatures in New York City reached 95 degrees, and humidity made the air feel as if it were 100 degrees.
Production at mines rose 1.1 percent after rising 0.1 percent.
The economy grew at a 6.1 percent rate in the first quarter. The Blue Chip Economic Indicators survey calls for 2.6 percent expansion in the second quarter, 3.3 percent in the third and 3.7 percent in the final three months of the year.
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Best regards, J.T. |
