US industrial output increased in June—the first monthly advance since March, according to this morning’s update from the Federal Reserve. Production rose 0.3% last month, the most since last November. Is this a sign that the industrial sector is stabilizing after months of decelerating growth? Maybe, although it’s hard to know based on a single monthly report. But let’s throw caution to the wind and say that the outlook for industrial activity looks a touch brighter in the wake of today’s numbers.
The monthly comparison firmed up in June, but the trend remains shaky. Industrial output’s annual growth inched lower for the seventh straight month. The decline rate eased. Nonetheless, output increased by a thin 1.5% for the year through June, the slowest growth in more than five years.
The case for optimism for this critical index, in other words, rests largely on the latest monthly pop. That’s a thin reed, but perhaps it will become a bit thicker in next month’s update.
Fed Chair Janet Yellen seems to think that’s a reasonable expectation. “Prospects are favorable for further improvement in the US labor market and the economy more broadly,” according to prepared remarks for a speech she’s scheduled to give in Congress today. “The FOMC expects US GDP growth to strengthen over the remainder of this year and the unemployment rate to decline gradually.”
There’s only a glimmer of support in her projection via today’s figures for industrial output. But for the moment, that’s a touch better compared with recent history for this indicator.