Daniel J. Meckstroth, chief economist for the Manufacturers Alliance for Productivity and Innovation (MAPI), has weighed in on the recent factory production numbers from the Federal Reserve:
“The Federal Reserve reported that industrial production increased 0.6 percent in May after falling 0.3 percent in April (revised up from an originally reported 0.6 percent decline). Mining sector production was up 1.3 percent but utility production fell 0.8 percent in May. Manufacturing production rose 0.6 percent after falling 0.1 percent in April (revised up from an originally reported 0.4 percent decline).
“The manufacturing production report confirms the strong performance suggested by the Purchasing Managers Index earlier this month. Manufacturing activity grew in the first quarter when the general economy was declining, and the pace of manufacturing production accelerated in the spring. The industrial production report finds that 13 of the 20 major manufacturing industries posted growth in May and 5 of these industries grew more than 1 percent from April to May—wood products, machinery, miscellaneous, petroleum and coal products, and plastics and rubber products.
“The report is a very positive confirmation that the manufacturing sector will continue to grow faster than the general economy this year and next. Growth is driven by a ramping up of the housing supply chain, a rebuilding of transportation equipment infrastructure, strong growth in oil and gas infrastructure, and pent-up demand for factory machinery. Capital spending for business equipment and machinery and big-ticket spending by consumers, both of which drive manufacturing activity, are demonstrating that economic growth is on a solid footing.”