By Greg Robb, MarketWatch
The numbers: Industrial production rose 5.4% in June, the second gain after a steep drop in March and April, the Federal Reserve reported Wednesday. Wall Street economists had forecast a 4.1% gain, according to a MarketWatch survey. May output was up 1.4%.
This followed a record 12.5% drop in April and a 4.4% decline in March.
Industrial production is still down 10.9% compared to pre-COVID-19 trend and production fell at a 42.6% annual rate in the second quarter, the largest quarterly decline since right after the end of the second World War.
What happened: Manufacturing rose 7.2% in June. Auto production jumped for the second straight month but remains nearly 25% below its February level. All categories of production rise except for mining, which includes oil production.
Big picture: Manufacturing is slowly recovering from the sudden stop in March and April but there is a wall of worry facing the sector, economists said, including weak demand, supply chain disruptions, and historically low oil prices.
What are they saying? “Ongoing issues related to virus-related interruptions as well as weak demand will continue to restrain output going forward,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.
Market reaction: U.S. stocks opened sharply higher. The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.88% was up over 315 points in early trading.