The Federal Reserve reported that industrial production was up 0.9 percent in July, building on the gains in May and June. On a year-over-year basis, industrial production has increased 3.7 percent. Likewise, manufacturing production rose 0.6 percent in July, after growing by 0.2 percent in each of the previous two months. Manufacturers’ capacity utilization also edged higher in July by 0.2 percent.

This report shows that manufacturing production is starting the third quarter off much stronger than it did the second quarter. Leading the charge is the motor vehicle sector. In fact, if you were to exclude the motor vehicle sector, manufacturing production would have risen just 0.3 percent. This is yet another sign that the automotive sector is beginning to recover from its supply chain challenges of the spring that resulted from the Japanese earthquake and subsequent tsunami. However, while the rest of the industry is experiencing gains, they continue to be modest.

Looking at specific industry groups within manufacturing, all but 4 of the 19 sectors experienced gains – a sign that the increased production was relatively broad-based. The sectors with the strongest monthly increases include: motor vehicles and parts (up 5.2 percent), primary metals (up 1.7 percent), aerospace and miscellaneous transportation equipment (up 1.3 percent) and plastics and rubber products (up 1.1 percent).

The largest declines were in electrical equipment, appliances and components (down 2.3 percent) and apparel and leather (down 1.8 percent). Production in durable goods rose 1 percent for the month and 6.6 percent for the year; whereas, nondurables rose 0.3 percent and 1.7 percent, respectively.

It is notable that this survey comes on the heels of the downbeat Empire State Manufacturing Survey released yesterday. That report from the New York Federal Reserve Bank seemed to echo the sentiment of many others by reporting a manufacturing sector with fewer new orders and less production. Let’s hope that today’s industrial production figures bode well for future growth.

Chad Moutray is chief economist, National Association of Manufacturers.