U.S. industrial production rose 0.4 percent in May, more than expected, aided by a rebound in demand for business equipment and consumer goods, the Federal Reserve said.
The increase in production at the nation's factories, mines and utilities last month follows a revised 0.3 percent decrease in April that was deeper than first estimated, the Fed said today in Washington...
Business investment is picking up again after a surge in 2004, when tax advantages siphoned orders from the current year. Lower energy prices may also have spurred consumer spending, suggesting economic growth will be sustained. Another Fed report earlier today showed that manufacturing rebounded in New York state in June after hitting a two-year low in May.
"The distortion created by last year's tax incentives has largely played out, after accounting for some softness in business investment in the first quarter,'' said Diane Swonk, chief economist at Mesirow Financial Inc. in Chicago, before the report. "It looks like investment is coming back a bit and is more fundamental than tax driven.'"
From MarketWatch, we get this speculation:
A stream of economic data on Wednesday highlighted by a rebound in U.S. industrial production has given some economists reason to say the 'soft patch' that hit the economy in March and April is behind us...
"There was broad-based strength in consumer goods, business equipment and defense," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.
"The comfortable May increase, combined with another likely gain in June, implies that we will return to 4% growth for this measure in third quarter as we enter the quarter on a solid note," said Action Economics.
The industrial production report, a generally positive outlook from the Federal Reserve Banks, and yesterday's seemingly benign CPI inflation news all contributed to this headline from the Financial Times:
US data back Fed policy on rate increase