By Greg Robb, MarketWatch
Bloomberg News/Landov Enlarge Image
The numbers: The U.S. factory sector declined in the three months ended in June, the second straight quarterly decline, the Federal Reserve said Tuesday.
For the second quarter, production was down 1.2% after a 1.9% decline in the first three months of the year. Manufacturing fell at a 2.2% rate in the second quarter after a 1.9% drop in the first three months of the year.
For June, industrial production was flat, slightly below the 0.1% gain expected by Wall Street economists.
Compared to 12 months earlier, industrial production rose 1.3%.
Capacity in use slipped to 77.9% in June from 78.1 in the prior month.
What happened: In June, increases in manufacturing and mining were offset by a sharp decline in the output of utilities.
Manufacturing output rose 0.4% after a 0.2% gain in May.
Mining output rose 0.2% in June, while utilities output slumped 3.6%.
Within manufacturing, the index for business equipment and for construction both rose 0.5%. The index of consumer goods was unchanged.
Motor vehicle assemblies picked up to a seasonally adjusted annual rate of 11.6 million, for the second straight strong monthly gain.
Big picture: Federal Reserve Chairman Jerome Powell cited the weak factory sector as one reason many policy makers support cutting interest-rates.
What they are saying? “The sector is in recession. That’s not news, it’s a consequence of China’s cyclical slowdown and the trade war. We expect another tough quarter in Q3, but by Q4 we think a trade deal will have been done and China’s economy will be turning up,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Market reaction: The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.09% opened higher on Tuesday after second-quarter earning reports from some of the largest domestic banks.