U.S. Industrial Production Picked Up Again in June -- 2nd Update
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
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
A separate Fed report said economic activity increased this
summer, but remained well below levels seen before the pandemic.
The Fed's beige book, which compiles business anecdotes from around
the country, said employers increased hiring across the country as
many businesses reopened. Still, many companies reported new
layoffs and said it was difficult to rehire workers given health
and safety concerns, child-care needs and expanded unemployment
benefits that exceed normal pay for some workers.
Some businesses were concerned the pace of recovery wouldn't
continue if the coronavirus wasn't contained. In the Cleveland Fed
district, more firms cut worker pay, particularly for
higher-salaried employees, than in the last beige book's reporting
The pace of economic recovery in St. Louis had slowed since
mid-June. "One staffing contact reported small firms were
'decimated,' estimating that 5% of their small clients had filed
for bankruptcy and expecting up to 25% to do so by the end of the
year," the report said.
June's industrial output 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
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
"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
--Sarah Chaney contributed to this article.
Write to David Harrison at email@example.com
(END) Dow Jones Newswires
July 15, 2020 15:57 ET (19:57 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.