Robust manufacturing output buoys U.S. economic outlook
By Lucia Mutikani
WASHINGTON (Reuters) - U.S. manufacturing output rose broadly in July and automobile production recorded its largest increase in five years, boosting the economy at the start of the third quarter.
While other data on Friday showed some cooling in factory activity in New York state this month, economists said it did not change the view of an economy with strong momentum, noting that the pullback followed a robust increase in July.
"The broad-based nature of the (manufacturing) gains indicates that the strong second-quarter rebound in economic growth momentum is being sustained," said Millan Mulraine, deputy chief economist at TD Securities in New York.
The Federal Reserve said factory production jumped 1.0 percent last month after rising 0.3 percent in June. That was the largest gain since February and reflected increases across all major categories.
Auto production surged 10.1 percent, the biggest rise since July 2009. There were also sturdy gains in the production of machinery and computers and electronic goods, which economists said hinted at a pick-up in business investment this quarter.
A stronger pace of business investment is needed to ensure sustained economic growth.
The economy grew at a 4.0 percent annual pace in the second quarter and current forecasts peg the growth rate for the third quarter within a range of 2.5 percent to 3.0 percent.
Industrial capacity utilization, a measure of how fully firms are using their resources, last month hit its highest level since February 2008. Continued...