By Vicki Needham - 08/15/14 10:51 AM EDT
Factory production surged in July for the sixth straight month, boosted in large part by a jump in auto manufacturing.
Manufacturing output increased 1 percent last month, more than forecast and its largest increase since February, up from 0.3 percent in June, and production is up 4.9 percent in the past year, the Federal Reserve reported on Friday.
“Manufacturing leaders have also been disappointed with the slow pace of growth in the first half of this year, and their upbeat sentiment about the second half remains is filled with caution,” said Chad Moutray, chief economist for the National Association of Manufacturers.
“For that reason, policymakers should focus on those initiatives which will keep the economy growing moving forward."
The economy contracted at a 2.1 percent pace in the first three months of the year but rebounded in the April to June period to a 4 percent rate.
At 104.4 percent of its 2007 average, total industrial production, which also includes mines and utilities, in July was 5 percent above its year-ago level.
The production of motor vehicles and parts jumped 10.1 percent, which was the largest increase in five years.
Manufacturing is bolstering economic growth, which seems to finally be picking up pace after years of steady growth amid a series of false starts.
Meanwhile in July, production at mines increased 0.3 percent, its ninth consecutive monthly gain.
Utility output dropped 3.4 percent on cooler summer weather that reduced demand for air conditioning.
Capacity utilization edged up 0.1 percentage point to 79.2 percent in July, a rate 1.7 percentage points above its level of a year earlier but still 0.9 percentage points below its long-run (1972–2013) average.
Business equipment production surged 1.3 percent, the most since February.
Manufacturing has shown better signs of life in recent months — the sector added 51,000 total jobs in June and July, a good sign going forward for the rest of the year.
Also, a separate Commerce Department report earlier this week showed a 1.1 percent increase in factory orders.