Per the latest report from the Federal Reserve on Aug 15, U.S. industrial production for the month of July increased 0.1%. The rise in the metric, which measures output at factories, mines and utilities across the country, was buoyed by a steady rise in manufacturing output.

An increase in manufacturing activity points toward steady economic growth. Under circumstances where manufacturing and factory output remains robust, investing in stocks of companies from the space seems prudent.

U.S. Manufacturing Remains Upbeat

Experts had largely expected that U.S. factories would suffer due to an increase in tariffs on China by the Trump administration. Such anticipations stemmed from the fact that China too had imposed increased retaliatory tariffs on the United States. However, manufacturing output, which constitutes about 12% of the economy, increased steadily on the back of strong domestic and global demand. The metric gained 0.3% last month, in line with the consensus estimate.

Such growth was pivotal in boosting overall industrial production last month. On the other hand, capacity utilization, which measures the overall production efficiency of firms within the country, remained unchanged from June at 78.1% in July.

What Led to the Growth?

Apart from improving manufacturing activity, a steady increase in motor vehicle production, machinery output, and production of computers and electronics in the country contributed significantly to last month’s rise in industrial production. While motor vehicle production rose 0.9% last month, machinery output and production of computers and electronics logged 0.6% and 1.9% growth, respectively, in the same period.

Notably, manufacturing output increased 2.8% from the same period in 2017. Meanwhile, mining production declined 0.3% in July and oil and gas well drilling declined 4.3% in July. Despite falling, mining output remained well above the 2017 level, increasing 13% last year. Also, utilities have increased 2.3% from 2017.

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