The 1 percent increase in July industrial production indicates marked strength in the manufacturing sector, says Joel Naroff, chief economist at Naroff Economic Advisors.
The July gain was twice what economists expected.
“This may be a slow recovery but don’t tell that to the manufacturers who are sharply ramping up their production,” Naroff, formerly chief economist at TD Bank, wrote in a commentary to clients obtained by Moneynews.
Many economists have turned pessimistic, and growth slid to 2.4 percent in the second quarter from 3.7 percent in the first.
“The upturn continues on, and if you read the press, or even my commentaries, you would think it is barely moving forward,” Naroff writes.
“But when it comes to industrial production, that is not the case. After its brush with death last year, this segment of the economy is becoming a bright light in the recovery, with production up over 26 percent since last July.”
The report should cheer investors, Naroff says. And as for the Federal Reserve, “Since it is the Fed’s own data, the FOMC (Federal Open Market Committee) members might start to wonder if their fears of a slowdown were overblown.”
Others viewed the gain as significant too. “This is encouraging,” Lou Crandall, chief economist at Wrightson ICAP, told Bloomberg.
“This is a welcome interruption in the softening trend of economic data. Factory output is still growing solidly.”
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