WASHINGTON (Reuters) -U.S. factory production edged up in June as a decline in motor vehicle output was offset by gains elsewhere, though manufacturing remains constrained by tariffs on imports.
Manufacturing output ticked up 0.1% last month after an upwardly revised 0.3% increase in May, the Federal Reserve said on Wednesday. Economists polled by Reuters had forecast production unchanged after a previously reported 0.1% gain in May. Production at factories increased 0.8% on a year-over-year basis in June.
It grew at a 2.1% annualized rate in the second quarter after expanding at a 3.7% pace in the January-March quarter.
President Donald Trump’s aggressive tariffs, including a 50% duty on steel and aluminum as well as a 25% tax on motor vehicles and parts, continued to overshadow manufacturing, which accounts for 10.2% of the U.S. economy.
Trump last week announced that higher duties would come into effect on August 1 for imports from a range of countries, including Mexico, Japan, Canada and Brazil, as well as the European Union.
Trump has defended the duties as necessary to revive a long-declining U.S. industrial base, but economists say that cannot be accomplished in a short period of time, citing high production and labor costs as among the challenges.
Motor vehicle and parts output dropped 2.6% last month after rebounding 4.6% in May. Production of aerospace and miscellaneous transportation equipment rose 1.6% while output of primary metals increased 3.1%.
Durable goods manufacturing production was unchanged. Nondurable manufacturing output rose 0.3%, lifted by a 2.9% increase in the production of petroleum and coal products.
Mining output fell 0.3% after climbing 0.1% in the prior month. Utilities production rebounded 2.8% as a heat wave across the country boosted demand for air conditioning. That followed a 2.5% drop in May.
Overall industrial production increased 0.3% after being unchanged for two straight months. Industrial output advanced 0.7% on a year-over-year basis. It increased at a 1.1% rate in the second quarter, slowing from the 4.3% pace notched in the first quarter.
Capacity utilization for the industrial sector, a measure of how fully firms are using their resources, increased to 77.6% from 77.5% in May. It is 2.0 percentage points below its 1972–2024 average. The operating rate for the manufacturing sector edged up to 76.9% from 76.8 in May. It is 1.3% percentage points below its long-run average.
(Reporting By Lucia Mutikani; Editing by Mark Porter)
Comments