US industrial output in July posted its biggest gain since January on a big gain in utilities output and a third straight monthly rise in factory activity, the Federal Reserve said today.
Production at factories, mines and utilities jumped a larger-than-expected 0.5 per cent, the Fed said - its biggest rise since January's 0.7 per cent gain. Firms also ran at a faster 74.5 per cent of full capacity in July, up from 74.2 per cent in June.
Wall Street analysts had expected production to post a 0.1 per cent rise and the gauge of capacity use to come in at 74.3 per cent.
In the report, factory activity, which accounts for almost 85 per cent of total industrial production, rose 0.2 per cent. Utilities output surged 3.9 per cent as a warmer July spurred demand for electricity while production in the mining sector dipped 0.4 per cent.
The report is the latest to show the hard-hit factory sector may finally be on the mend. In July, the Federal Reserve's anecdotal "beige book" report on national economic conditions said there were "nascent signs" of recovery in manufacturing.
Factory managers have cut payrolls to levels not seen since the late 1950s as firms squeeze more production out of workers and equipment.
But economists are optimistic that US economic growth should pick up from the moderate 2.4 per cent annual rate seen in the second quarter as the effects of a tax package passed by Congress in the spring make their way through the economy.