Industrial production grows at fastest pace in more than a year
Strong auto manufacturing and output from utilities pushed industrial production to swell 1.1% in April, its fastest growth rate in more than a year.
Motor vehicles and parts, coming off a strong sales season, increased nearly 4%. After unexpectedly warm weather depressed demand for heating, utilities saw a 4.5% boost, the Federal Reserve said Wednesday. Mine production was up 1.6%.
The Fed revised its March production rate, which it previously said was flat, to reflect a 0.6% decline. Compared with the previous year, April production was 5.2% higher.
The earlier seasonal distortions “are still wreaking havoc with many economic data series,” according to Cliff Waldman, senior economist for the Manufacturers Alliance for Productivity and Innovation.
Durable goods have largely fueled the rise in manufacturing, which the Fed said was up 0.6%. This spring, several experts have declared an American manufacturing renaissance. Many companies are returning to the U.S. amid rising wages and twisty logistics in China, reports have found.
Low interest rates, better access to credit and pent-up demand have resulted in improving auto production, according to a research note from PNC. Though manufacturing payrolls are still down by more than 2 million from the spring of 2006, they’re up by almost 500,000 since bottoming in early 2010.
Capacity utilization, a gauge of how much firms are using their resources, rose to 79.2% -- a four-year high, according to the Fed.
But cautious consumers have made nondurables a riskier bet. And economists say that the troubled Eurozone, weakness in the rest of the industrialized world, a blase investment attitude in the U.S. and slowing growth in emerging markets will “create head winds” for factories.
“Manufacturing output growth is slowing from the outsized gains seen during the first quarter of 2012,” said Waldman in a statement.
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