U.S. factory output increased for a second straight month in June as motor vehicle production accelerated amid the reopening of businesses, but the nascent improvement in manufacturing activity was overshadowed by surging new COVID-19 infections.
The Federal Reserve said on Wednesday manufacturing production increased 7.2 per cent last month after climbing 3.8 per cent in May.
Still, factory output was 11.1 per cent below its level in February.
Economists polled by Reuters had forecast manufacturing output rising 5.6 per cent in June.
Businesses have resumed operations after being shuttered in mid-March in an effort to slow the spread of the coronavirus.
But there has been a resurgence in new infections of the respiratory illness, especially in the highly populated South and West, prompting some authorities in these regions to either shut down businesses again or pause re-openings.
Production at factories contracted at a 47.0 per cent annualized rate in the second quarter after falling at a 5.5 per cent pace in the January-March period. Manufacturing, which accounts for 11 per cent of the U.S. economy, is also being constrained by the fallout from the Trump administration’s trade war with China.
Global supply chains remain fragile and demand for crude oil is weak, leading to lower prices that are undercutting spending by oil producers on drilling and shaft exploration equipment. Economists expect business spending to have contracted in the second quarter, the fifth straight quarterly decline.
Motor vehicles and parts production vaulted 105.0 per cent in June after rising 120 per cent in May. Still auto production remained nearly 25 per cent below its pre-pandemic level.
