WASHINGTON – Industrial production climbed more than forecast in May, a sign gains in manufacturing are supporting growth as the U.S. economy picks up.
Output at factories, mines and utilities rose 0.6 percent after a revised 0.3 percent drop in April that was smaller than previously estimated, a report from the Federal Reserve showed Monday in Washington. The median forecast in a Bloomberg survey called for a 0.5 percent increase. Manufacturing, which makes up 75 percent of total production, also increased 0.6 percent.
Demand for industrial goods is improving as consumer and business spending strengthen and the economy rebounds from its worst performance in three years. Bigger gains in corporate investment and stronger growth in overseas markets will be needed to provide an additional lift for U.S. producers.
“As the economy improves, so does the manufacturing sector,” Harm Bandholz, chief U.S. economist at UniCredit Group in New York, said before the report. “It seems that the economy is gaining some momentum again.”
Stock-index futures fell as intensifying unrest from Iraq to Ukraine overshadowed corporate deals. The contract on the Standard & Poor’s 500 Index maturing in September dropped 0.2 percent to 1,924.8 at 9:19 a.m. in New York.
Estimates of the 79 economists surveyed by Bloomberg ranged from a production drop of 0.1 percent to a 0.8 percent gain. The prior month was previously reported as a 0.6 percent decline.
Another report released Monday showed manufacturing unexpectedly picked up this month as orders jumped. The Federal Reserve Bank of New York’s factory index rose to 19.3 for June, the highest in four years, from 19 the prior month. Readings greater than zero signal growth for the so-called Empire State Index that covers New York, northern New Jersey and southern Connecticut.
Economists in the Bloomberg survey projected the Fed’s May industrial production report would show manufacturing, which accounts for about 12 percent of the U.S. economy, would rise 0.6 percent.