Expect 0.5% increase in industrial production in June - Nomura
Analysts at Nomura expect a healthy 0.5% increase in US industrial production (IP) in June after a flat reading in May.
“A slowdown in May was attributable to a sharp decline in auto production and slight moderation in factory output excluding autos. Autos output will likely come in weak again in June, as automakers adjust their output in response to slowing light vehicle sales. Auto production could continue to weigh down top-line IP in the near or medium term as automakers continue to adjust their production in coming months. However, incoming data point to a continued improvement in core factory output (excluding autos and auto parts).”
“The ISM manufacturing index improved in June with broad-based strength in its subindexes. Core capital goods orders and shipments posted modest gains in May, implying continued momentum in business activity as well as equipment investment in concurrent and upcoming months. Therefore, we expect core factory output to rebound decently in June. Moreover, we expect mining sector output to contribute solidly to total output growth. Industry data suggest crude oil and liquid gas output increased steadily in June. Further, active oil and gas rig counts continued to rise in the month, implying persistent strength mining support sector output.”
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