U.S. industrial production rose sharply in July after two straight months of decline, lifted by a jump in automobile products and "very high temperatures," the Federal Reserve said Wednesday.
While the rebound is positive news for producers, a downward revision to the manufacturing data from earlier this year means the July manufacturing index now sits below its level in July 2022.
Overall industrial production rose by 1.0% in July, lifted by a 5.2% rise in the production of motor vehicles and parts, the Fed announced in a statement.
This was well above the median expectation of economists surveyed by MarketWatch, who expected a 0.3% increase.
"We think last month's increase will be reversed quickly as the industrial sector is poised to face multiple, intense challenges," Oxford Economics' lead U.S. economist Oren Klachkin wrote in a note to clients.
"Weakening goods demand, elevated interest rates, tighter lending standards, inventory destocking, and the strong US dollar all portend weaker industrial production in the months ahead," he added.
July's figure follows two straight months of decline in May and June, with a slump in consumer durables responsible for much of the June contraction.
Manufacturing output rose 0.5% in July, as did mining output.
"Very high temperatures" in July also boosted demand for energy to power air conditioners, pushing the utilities index up by 5.4%, according to the Fed.
The Fed is mulling another interest rate hike next month to cool above-target inflation.
However, many analysts and futures traders currently see a high chance of the Fed holding interest rates steady next month, if current trends continue.
Copyright 2023, Agence France-Presse
