Industrial production rose in June for the first time in two months but at a slender rate, and without any help from manufacturing, the Federal Reserve reported Friday.
The 0.2% growth rate was slower than the 0.5% consensus increase predicted by economists polled by MarketWatch.
And May’s levels for industrial production were revised lower to show a 0.1% drop, from the initially reported 0.1% gain.
For the second quarter, industrial production rose at a slender 0.8% annual rate, in what the Fed mostly attributed to the supply-chain disruptions following the March earthquake in Japan. Motor vehicle and part production tumbled 16.4% from April to June, the Fed’s data showed. Output growth in June was led by a 0.9% increase in the volatile utilities component, which largely reflects air conditioning usage, while manufacturing output didn’t budge at all.
Excluding the motor vehicles and parts industry, industrial production rose just 0.1%, demonstrating that not all the weakness stems from the Japan-related supply shortage.
Even business equipment production — one of the two bright spots pointed out by Federal Reserve Chairman Ben Bernanke — dropped 0.7%, the third drop in four months, pointed out Jennifer Lee, senior economist at BMO Capital Markets.
“Perhaps the same explanation to hiring applies to orders of business equipment…..waiting to see how the economy looks over the next few months, how the debt talks play out, etc.,” she said in a note to clients.
Capacity utilization stayed at 76.7% for a second month, slightly below economist expectations of 76.9%.
Earlier Friday, the Federal Reserve Bank of New York reported a second straight negative reading in its Empire State manufacturing index for July.
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