WASHINGTON- US factory output rose by the most in more than 74 years in June as motor vehicle production accelerated amid the reopening of businesses, but the nascent economic recovery was overshadowed by surging new COVID-19 infections.
The Fed said manufacturing production jumped 7.2 percent last month, the largest gain since March 1947, after climbing 3.8 percent in May. Despite two straight monthly increases, factory output was 11.1 percent below its level in February. Economists polled by Reuters had forecast manufacturing output rising 5.6 percent in June.
Production at factories contracted at a 47.0 percent annualized rate in the second quarter after falling at a 5.5 percent pace in the January-March period. Manufacturing, which accounts for 11 percent of the US economy, is also being constrained by the fallout from the Trump administration’s trade war with China.
Global supply chains remain fragile and demand for crude oil is weak, leading to lower prices that are undercutting spending by oil producers on drilling and shaft exploration equipment.
Economists expect business spending to have contracted in the second quarter, the fifth straight quarterly decline. They believe gross domestic product dropped at its steepest pace in the second quarter since the Great Depression.
Separately, the Fed said in its Beige Book report of anecdotal information on business activity collected from contacts nationwide, economic activity increased in almost all districts through early July.
