US industrial production offers positives for growth - ING
James Knightley, Chief International Economist, explains that US retail sales may have disappointed in June, but the industrial sector is clearly in good health with business surveys suggesting this will continue.
"US industrial production rose 0.4% MoM in June, a touch stronger than the 0.3% consensus, while May’s growth rate was revised up to 0.1% from flat. Within the details of the report manufacturing rose 0.2%MoM, utilities output was flat while mining output rose 1.6%."
"Oil and gas well drilling was the strongest component, rising 6.8%MoM (and is up 108.2% in the past twelve months). This highlights how much more efficient US production has become - growing at such a strong rate despite relatively subdued energy prices. It also underlines the challenge for OPEC’s supply cut efforts to get the oil price higher."
"With the ISM manufacturing index showing very strong order books and working hours in the sector continuing to rise we believe manufacturing output will continue to strengthen, helping to push US GDP growth rates higher after 1Q’s disappointing outcome."
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