Factory production in U.S. gains on stronger auto assembly

WASHINGTON – Factory production rose more than economists forecast in July as automobile assembly jumped to the highest since 1978, indicating American manufacturing is regaining its footing after a slowdown.

The 0.8 percent increase was the biggest since November and followed a revised 0.3 percent decline in the prior month, the Federal Reserve reported Friday. Total industrial output, which includes mines and utilities, climbed 0.6 percent as oil drilling rose for the first time since September.

Rising purchases of automobiles and a broad-based increase in retail sales in July signal assembly lines may remain busy in the second half of 2015. Improving U.S. demand will help cushion factories from weakening global markets, the stronger dollar and the slump in oil prices.

“The consumer is in better shape, which is now being reflected in manufacturing output,” said Drew Matus, New York-based deputy chief U.S. economist for UBS Securities LLC, who correctly projected the gain in manufacturing production. “We’re set up for a pretty healthy second half.”

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Industrial production in June advanced by a revised 0.1 percent.

Utility output decreased 1 percent after a 2.3 percent rise the previous month.

Mining production, which includes oil drilling, increased 0.2 percent after climbing 0.7 percent. Oil and gas well drilling increased 1.3 percent following a 4 percent drop in June.

The median forecast in a Bloomberg survey of economists called for a 0.4 percent gain in factory output and a 0.3 percent gain in total industrial production.

For manufacturing, which makes up 75 percent of total production and accounts for about 12 percent of the economy, the June reading was revised from no change.

Capacity utilization advanced to 78 percent from 77.7 percent the previous month, the report showed.

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