Industrial production in the U.S. climbed more than forecast in April, propelled by gains in auto manufacturing and utility use.
Output at factories, mines and utilities increased 1.1 percent last month, the most since December 2010, after a 0.6 percent decline in March that was revised from no change, the Federal Reserve reported today in Washington. Economists forecast a 0.6 percent gain, according to the Bloomberg News survey median. Manufacturing, which makes up about 75 percent of total production, rose 0.6 percent. Utility output climbed the most in two years.
Motor vehicles sales in the first quarter that were the strongest in four years have buoyed manufacturing, helping make up for a slowdown in corporate equipment purchases. While U.S. exports accelerated during the first three months of 2012, weaker economies in Europe and parts of Asia remain a hurdle for American factories.
“Things are looking brighter than they were a few months ago,” said Millan Mulraine, senior U.S. strategist at TD Securities Inc. in New York. “Auto production is doing well because consumers are buying vehicles, and consumers are buying vehicles because they feel more positive about their job prospects.”
Estimates of the 79 economists surveyed by Bloomberg ranged from gains of 0.2 percent to 1 percent. March industrial production was previously reported as unchanged.
Other data today showed builders broke ground on more homes than forecast in April. Housing starts climbed 2.6 percent to a 717,000 annual rate from March’s revised 699,000 pace that was stronger than previously reported, the Commerce Department said.
Stocks climbed after the figures, with the Standard & Poor’s 500 Index rising 0.7 percent to 1,340.7 at 9:51 a.m. in New York.
The figures showed motor vehicle production jumped 3.9 percent in April after a 1.2 percent increase the month before. Factory output minus production of vehicles and parts rose 0.3 percent.
Auto sales in the first quarter averaged an annual rate of 14.5 million, the strongest since the same three months in 2008, according to Ward’s Automotive Group data.
Production of business equipment increased 1.5 percent after a 0.2 percent gain in March.
Utility production climbed 4.5 percent last month, the biggest gain since May 2010, after a 0.7 percent gain in March. Mining output rose 1.6 percent following a 1.7 percent decline.
Today’s report also showed that capacity utilization, which measures what portion of a plant is producing, increased to 79.2 percent, the highest since April 2008, from 78.4 percent in March.
A regional report yesterday showed manufacturing picked up in May. The Federal Reserve Bank of New York’s general economic index climbed to 17.1 from April’s 6.6. Readings greater than zero signal expansion in the index, which covers New York, northern New Jersey and southern Connecticut.
W.W. Grainger Inc., a supplier of maintenance, repair and operating equipment, in April reported a 12 percent increase in sales. The company, based in Lake Forest, Illinois, has been expanding in the U.S. and investing overseas.
“Industrial production was really strong in the first quarter,” Grainger Chief Financial Officer Ron Jadin said in a May 8 earnings call. “We’re anticipating as we look at the year that industrial production will grow at a slower rate, still expand, but at a slower rate.”