US production robust in the second quarter

Posted on 10 Aug 2018 and read 391 times
US production robust in the second quarterAccording to a Reuters report, US industrial production increased in June, boosted by a sharp rebound in manufacturing and further gains in mining output — the latest sign of robust economic growth in the second quarter.

However, it also says that the outlook for the industrial sector is uncertain because of escalating trade tensions between the USA and its major trading partners, which threaten to disrupt global trade.

The report adds that a strong dollar and a shortage of workers also pose a risk to production, with factory surveys suggesting some strain in the supply chain.

Chris Rupkey, chief economist at MUFG in New York, said: “Time will tell if this disruption in foreign trade will slow the overall US economy, because manufacturers cannot get what they need to produce goods here for domestic consumption and for exports.”

The Federal Reserve says industrial production rose by 0.6% last month after falling by 0.5% in May. It “accelerated at a 6.0% annualised rate” in the second quarter, after a 2.4% increase in the first quarter.

Manufacturing output increased by 0.8% in June after falling by 1.0% in May. A 7.8% increase in motor vehicle production buoyed manufacturing output last month, following a decline of 8.6% in May after a fire at a parts supplier caused a sharp drop in the assembly of trucks.

Excluding motor vehicles, manufacturing production rose by 0.3% in June. Manufac-turing, which accounts for about 12% of the USA’s economy, is being supported by a strong domestic and global economy.

The data came on the heels of a report showing that retail sales not only rose solidly in June but were also much stronger than previously reported in May.

Strong industrial production and retail sales, together with smaller trade deficits in April and June, suggest that economic growth accelerated sharply in the second quarter.

However, the International Monetary Fund has warned that tit-for-tat import tariffs threaten to derail the global economic recovery, adding that the USA is especially vulnerable to a slowdown in its exports.

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