WASHINGTON - U.S. factory output in April rose at its fastest clip in three years on a surge in auto production, supporting the view that economic growth was rebounding in the second quarter after a sluggish start to the year.
The Federal Reserve said on Tuesday manufacturing production rose 1.0 percent last month, the biggest gain since February 2014 and much faster than analysts expected.
Output of motor vehicles and parts led the expansion, growing 5.0 percent in April after dropping 3.6 percent a month earlier. Machinery output rose 0.9 percent and factories churned out 0.5 percent more fabricated metal products.
Overall industrial production rose 1.0 percent last month, also the biggest gain since February 2014, with pickups in coal mining and in drilling and support activities in the oil and gas industry. Mining output increased 1.2 percent last month, while utilities output moved up 0.7 percent as warmer-than-usual temperatures led people to use their air conditioners more, the Fed said.
Analysts had expected factory output to rise 0.3 percent last month. Manufacturing, which accounts for about 12 percent of the U.S. economy, had been regaining ground as the prolonged drag from lower oil prices, a strong dollar and an inventory
overhang faded. The sector has benefited from an improvement in business sentiment amid promises by the Trump administration to pursue business-friendly policies, including tax cuts and deregulation.
Last month, manufacturing capacity utilization, which measures how fully factories are deploying their resources, rose 0.7 percentage point to 75.9 percent.
Overall industrial capacity utilization also climbed 0.7 percentage point to 76.7 percent.
((Reporting by Jason Lange; Editing by Andrea Ricci))