The U.S. auto industry hit the gas pedal in July, powering factory output to a strong 1.0% increase, the Federal Reserve reported today. Manufacturing production stood at 100.7% of the base 2007 level and was 4.9% higher than in July 2013.
Production of motor vehicles jumped 10.1% in July, while output in the rest of the manufacturing sector increased 0.4%.
“Manufacturing growth was broad based in July,” noted Daniel J. Meckstroth, chief economist for the Manufacturers Alliance for Productivity and Innovation.
“Production was up in 15 of the 20 major manufacturing industries. What’s striking, however, was the explosive growth in the motor vehicles and parts industry—production increased 10% from June to July. The impact of the motor vehicle production rippled through the supply chain for glass, metals, textiles, leather, etc."
The production of durable goods rose 1.7% in July, up 8.2% from the same time last year. Production of nondurable goods also climbed by 0.3% and was 2.1% higher than in July 2013. NAM Chief Economist Chad Moutray noted that factory output was growing at its fastest year-over-year pace since June 2012.
"The five sectors with the fastest growth over the past 12 months include: motor vehicles and parts (up 21.9%), furniture and related products (up 9.2%), machinery (up 8.3%), plastics and rubber products (up 7.4%) and nonmetallic mineral products (up 7.3%)."
Capacity utilization at U.S. factories improved, from 77.2% in June to 77.8% in July.
Industrial production also showed a strong advance in July, up 0.4% to 104.4% of the 2007 baseline, the sixth consecutive monthly gain. Industrial production includes manufacturing, mining and utilities. Analysts had expected an increase of 0.2%.
Production at mines rose 0.3%. Output from utilities fell 3.4%, the result of milder weather in July that reduced the demand for air conditioning.
Capacity utilization for industry as a whole was up 0.1% to 79.2%.