The Federal Reserve reported Friday that industrial production edged up 0.2% last month. That was half the pace of the 0.4% gain in June, but it did surpass analysts' expectations for flat production in July.
The increase reflected a 0.4% gain in output at manufacturing plants. Motor vehicles and parts showed the biggest increase in manufacturing, advancing for a third straight month.
These gains were not seen as signaling a sustained rebound, however, given the problems facing the auto industry this year. Instead, the rebound in auto activity was viewed as a temporary improvement because a strike ended at parts supplier American Axle.
Even with the recent gains, production at auto plants remained 10.4% below where it was a year ago.
The increase in manufacturing helped to offset a big 1.9% drop in output at utilities, a decline which followed a 2.3% surge the previous month. Both changes were seen as weather-related.
The big June jump came from hotter-than-normal weather requiring increased electricity production. The decline in July reflected a return to more normal weather which meant a drop in utility output compared to the previous month.
Output in the mining sector rose a strong 0.9%, matching the increase of the previous month. The gains in this sector have been paced by strong activity in oil and natural gas production.
With all the changes, the nation's factories, mines and utilities operated at 79.9% of capacity in July, up slightly from June when the operating rate was 79.8% of capacity. That level remained below the average operating rate of 81% seen over the last 25 years.
Industry is having to struggle this year with a steep slump in housing, which has hurt producers of building supplies and furniture, and the continuing problems in the auto industry, which saw sales drop to the lowest level in 16 years in July.
A boom in U.S. export sales because of the weak dollar has helped offset this slump There is concern that the export boom may not last given spreading weakness in major overseas markets in Europe and Japan.
