Oil and gas drilling is at a 7-year high
The numbers: U.S. industrial production rose 0.6% in July, the Federal Reserve reported Tuesday.
The gain was above Wall Street expectations of a 0.3% increase, according to a survey by The Wall Street Journal.
Capacity utilization rebounded to 80.3% in July from 79.9% in the prior month. The capacity utilization rate reflects the limits to operating the nation’s factories, mines and utilities. Economists had forecast a 80.2% rate.
Output of the U.S. industrial sector was at an all-time high, eclipsing the level hit in 2018.
Key details: Manufacturing rose 0.7% in July after falling in the prior two months.
Motor vehicles and parts output rose 6.6% after a 1.3% fall on the prior month. Excluding autos, total industrial output increased 0.3%. Auto assemblies were the highest since August 2020.
Utilities output fell 0.8% in July. Mining output, which includes oil and natural gas, rose 0.7%, the third straight solid gain. Oil and gas drilling is at a 7-year high.
Big picture: Surveys of manufacturers show growing concern about the sector going forward, but the strong July reading was expected after the jobs report released early in the month showed a solid increase in hours worked in the sector.
What are they saying? “We expect output to flatline, more or less, over the next few months, but the auto rebound should keep total manufacturing output above water,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Market reaction: U.S. stocks DJIA, +0.71% SPX, +0.19% were mixed Tuesday after key earnings data from big U.S. retailers and weaker-than-expected housing starts.