By David Harrison 

U.S. manufacturing increased in June for the second straight month, a sign of economic recovery in the weeks before the recent surge in coronavirus cases.

Industrial production -- a measure of output at factories, mines and utilities -- rose a seasonally adjusted 5.4% in June from May, the Federal Reserve said Wednesday. That was a bigger increase than the 4% rise anticipated by economists surveyed by The Wall Street Journal.

The index for May was unrevised at 1.4% while the index for April was revised down to a 12.7% drop from a 12.5% drop.

As U.S. factories reopened in May and June, they helped drive a recovery from April's record decline. Still, despite the recent gains, the index for the second quarter as a whole fell at an annual rate of 42.6%, the largest quarterly decrease since World War II.

June's rebound was led by the manufacturing sector, the biggest component of industrial production, which posted a 7.2% gain, driven by production of autos and parts. Mining output decreased 2.9% and utilities output rose 4.2%, the Fed said.

It isn't yet clear how the recent uptick in new coronavirus cases will affect output in the coming months. Cases started surging toward the end of June and have continued rising. States such as California and Texas have imposed or are considering new restrictions to combat the virus, which could prompt more factory closures.

"Ongoing issues related to virus-related interruptions as well as weak demand will continue to restrain output going forward," said Rubeela Farooqi, chief U.S. economist at High Frequency Economics, in a note to clients.

Capacity utilization, a measure of slack in the industrial economy, also rose more than expected to 68.6% in June from a revised 65.1% in May, the Fed said. Economists surveyed by the Journal had expected capacity utilization to reach 67.5% last month.

Write to David Harrison at david.harrison@wsj.com

(END) Dow Jones Newswires

July 15, 2020 11:40 ET (15:40 GMT)

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