Energy Slump May Be Over Amid Factory Gains: Under the Hood

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Here’s the takeaway from the Federal Reserve’s report Friday in Washington that showed U.S. factory production advanced 0.8 percent in July, the biggest gain since November and double the median forecast in a Bloomberg survey of economists:

* Auto output rebounded 10.6 percent last month, taking assemblies to 13.6 million at an annual rate, the most since 1978, according to data compiled by Bloomberg.

* Excluding autos, factory production rose 0.1 percent.

* Increases in output of consumer goods,business equipment such as computers and electronics, and construction materials indicate investment is rebounding from a second-quarter slump.

The Surprise:

* The plunge in the energy patch may be over: Oil and gas drilling rose 1.3 percent, the first gain since September.

What Economist Said After the Report:

* “The consumer is in better shape, which is now being reflected in manufacturing output,” said Drew Matus, New York-based deputy chief U.S. economist for UBS Securities LLC, who correctly projected the gain in manufacturing production. “We’re set up for a pretty healthy second half.”