WASHINGTON, D.C. — US industrial production cooled in June but still exceeded analyst expectations, with manufacturing and utilities output both rising, the Federal Reserve (Fed) said on Wednesday.
Total industrial output rose 0.6 percent from the prior month, down slightly from May’s 0.9 percent reading, the report said.
Analysts expect that a slump in factory output that started in 2022 appears to now be in the rearview mirror.
The US central bank in 2022 rapidly hiked interest rates, lifting the cost of borrowing as it sought to ease demand and tamp down surging inflation.
Rates have remained high, taking a toll on businesses, as policymakers fight sticky inflation.
Among sectors, manufacturing output rose 0.4 percent in June, down from a 1.0-percent jump in May, the Fed said on Wednesday.
This was helped in part by the auto industry even as other sectors saw declines.
Mining gained 0.3 percent, while utilities increased 2.8 percent, with gains in both electric and natural gas, said the Fed.
For the second quarter, industrial output rose at an annual rate of 4.3 percent, up from the first three months this year.
“We doubt that manufacturing will continue to grow as rapidly as it did last quarter, partly because the manufacturing surveys remain so subdued,” said Oliver Allen, senior US economist at Pantheon Macroeconomics.
“A continued manufacturing boom probably requires either much lower interest rates or a more significant recovery in external demand, neither of which is materializing just yet,” Allen added.
Since late 2023, the Fed has held interest rates at a high level. But inflation readings have edged down, raising the likelihood that the central bank will soon signal the start of rate cuts.
“Lower interest rates as the Fed starts easing policy as well as ongoing investment in domestic manufacturing capacity should provide support to factory activity over time,” said economist Rubeela Farooqi of High Frequency Economics. AFP
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