Factory Output in U.S. Increases for First Time in Three Months

  • Manufacturing climbs on production of autos, business supplies
  • Total industrial output jumps, boosted by electricity demand

U.S. manufacturing production rose in April for the first time in three months, indicating a respite for the industry after a one-year slump, a Federal Reserve report showed Tuesday.

Key Points

  • Factory output, which makes up 75 percent of production, climbed 0.3 percent, erasing the prior month’s decline
  • Total industrial production, including mines and utilities, advanced 0.7 percent, the most since November 2014
  • Output at utilities jumped 5.8 percent, the biggest gain in more than nine years, as demand for electricity and natural gas returned to normal after a warm March

Big Picture

The worst of America’s manufacturing slump is probably over, although the industry may do little to add to economic growth. A decline in the dollar this year will help provide some relief going forward for export-oriented factories. Remaining hurdles includes still-soft overseas markets and U.S. businesses’ efforts to bring inventories more in line with a recent weakening in sales.

Economist Takeaways

“Manufacturing is slowly recovering,” said Michael Carey, chief economist for North America at Credit Agricole CIB in New York, who accurately forecast the gain in factory output. “The headwinds seem to be fading and the sector is moving forward at a moderate pace.”

The Details

  • Factory output minus motor vehicle production rose a more modest 0.2 percent
  • Mining production decreased 2.3 percent and reflected substantial cutbacks in crude oil and gas extraction as well as coal mining
  • Output at oil fields and mines has declined in 14 of the last 16 months
  • Manufacturing capacity utilization, which measures the amount of a factory that is in use, crept up to 75.3 percent from 75.1 percent
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