US manufacturing production boosts on autos

Production at US factories surged in July, boosted by an acceleration in motor vehicle output as auto makers either pared or canceled annual retooling shutdowns to work around a global semiconductor shortage.

Manufacturing output jumped 1.4 per cent last month after falling 0.3 per cent in June, the Federal Reserve said on Tuesday.

Economists polled by Reuters had forecast manufacturing production rising 0.6 per cent.

Last month, production at auto plants soared 11.2 per cent. The shortage of semiconductors has forced auto companies to adjust their production schedules. The Fed noted that “a number of vehicle manufacturers trimmed or canceled their typical July shutdowns,” when they retool their plants.

Despite the surge, production of motor vehicles and parts in July was about 3.5 per cent below its recent peak in January 2021, the Fed said.

Excluding autos, manufacturing output rose 0.7 per cent in July. Overall manufacturing in July was 0.8 per cent above its pre-pandemic level. Manufacturing, which accounts for 11.9 per cent of the US economy, is being underpinned by strong domestic demand. But that is straining the supply chain, leaving manufacturers struggling with shortages of raw materials and labor.

The situation could be worsened by the resurgence in Covid-19 infections from the Delta variant of the coronavirus.

The increase in manufacturing output and a 1.2 per cent rise in mining combined to boost industrial production by 0.9 per cent last month. Industrial output rose 0.2 per cent in June. Mining was driven by higher oil prices, which are supporting drilling activity. Utilities output fell 2.1 per cent.