US Industrial Production Shines

By FX Empire Analyst - Barry Norman
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US manufacturing produced made more cars, computers and airplanes last month, a hopeful sign that manufacturing is recovering after a weak spring.

Industrial production, which includes output at factories, mines and utilities increased 0.6 % in July from June, the fourth straight monthly increase, the Fed reported on Wednesday.

Factory output, crucial component of industrial production, rose 0.5 %, the following straight increase. Factory output has risen 21.9 per cent since its recession low hit in June 2009 and its only one.7 % below the pre-recession peak for factory output reached in April 2007.

Mining output, consisting of gas and oil production in addition to coal mining, increased 1.2 % in July. Utility output rose 1.3 %, largely due to warm climates in lots of areas of the country.

Manufacturing helped lift the economy out of the recession 3 years ago. However it has slowed this spring as consumers shrink spending and businesses invested less in machinery and equipment. Some worry that manufacturing could weaken further in coming months if Europe's financial disaster and slower global growth cut need of US exports.

Contributing to those worries on Thursday has been a survey coming from the Fed Bank of latest Empire State Index that showed manufacturing conditions within the New York region shrank in August. The Empire State index fell to -5.9, down from a reading of seven.4 in July.

Still, analysts noted which the growth in US factory output in July and June suggests the spring slowdown in manufacturing often is temporary. July's increase was led utilizing a 3.3 % surge in output of motorcars and parts. Production of computers and first metals an example could be steel also showed big gains.

The economy remains weak. US manufacturing activity shrank in June and July, according to a survey by the Institute for Supply Management. June was the first time the survey showed manufacturing contracted in 3 years.

Economic well being slowed to an annual rate of 1.5 % within the April-June quarter, reduced from 2.0 % in the January-March quarter and 4.1 % within the final three months period of 2011.

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