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July 15, 2020, 10:02 a.m. EDT

U.S. industrial output has second straight solid gain in June

Despite increase, production remains 10.9% below its pre-pandemic February level

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By Greg Robb, MarketWatch

Getty Images
A worker works brands the logo on a bat at the Louisville Slugger plant in Louisville, Kentucky in late May.

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.

US : Dow Jones Global
-244.56 -0.88%
Volume: 703.89M
Sept. 18, 2020 5:15p

Greg Robb is a senior reporter for MarketWatch in Washington. Follow him on Twitter @grobb2000.

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