The U.S. industrial production grew considerable in April, coming in above consensus expectations. Industrial production rose 1 percent sequentially, as compared with consensus projections of 0.4 percent. There were strong rises throughout manufacturing, utilities and mining in April.
Manufacturing output also grew 1 percent. The strength partially came from motor vehicle and parts that rose 5 percent sequentially. Manufacturing, excluding motor vehicles, was up 0.7 percent in April, driven by machinery production and implying strength in manufacturing outside of the auto production sector.
Production and sales of autos decelerated in the first quarter as compared with the fourth quarter last year, and the April industrial production and vehicle sales data imply a return to a more positive performance at the beginning of the second quarter, although the current rate of monthly rises in production is unlikely to be sustained throughout the quarter, noted Barclays in a research report.
The weakness seen in motor vehicle production in the first quarter was not surprising, however, sales and production are likely to stabilize later in 2017. Utilities output expanded 0.7 percent sequentially. Utilities production dropped in January and February due to unseasonably warm weather. A return to seasonally normal temperatures in March led to an 8.2 percent rebound in utilities production in the month. Meanwhile, mining production expanded 1.2 percent in April.
“Utilities output boosted our personal consumption tracking estimate, while strong autos production gave a boost to inventories, altogether raising our tracking estimate one-tenth. The Q2 tracking estimate was unchanged at 0.8% q/q saar”, added Barclays.
