Ahead of the Bell: US industrial production may rise
WASHINGTON (AP) — The Federal Reserve releases its industrial production report for July on Friday at 9:15 a.m. Eastern.
RISING OUTPUT: Economists forecast that industrial production rose 0.3 percent last month, matching the growth achieved in June, according to a survey by FactSet.
June marked the first increased in industrial output since November.
The manufacturing component of the report has been unchanged for the past two months. Mining, which includes oil and gas wells, increased 1 percent in June. Still, over the past year, cheaper energy prices have caused drillers to shut down their wells until oil and natural gas become more profitable. Utility output climbed 1.5 percent in June, as the summer heat led people to crank up their air conditioners.
MANUFACTURING CHALLENGES: Factories have been battered for much of 2015. Winter storms slowed and even stopped some assembly lines in January and February. The slowdown continued into the spring, as orders for equipment and machinery suffered by the rising value of the dollar cutting exports overseas and lower oil prices reducing orders from energy firms.
The dollar has risen about 20 percent against a basket of foreign currencies in the past 12 months, according to the Fed. That sharp increase has led to pricier U.S. goods around the world, hurting exports and orders.
Falling oil prices have also dragged down factory output. Crude oil prices, which were around $60 per barrel in the spring, fell close to $41 in early trading Friday, levels not seen since the global financial crisis. The decline has forced energy firms to curtail drilling, eliminating much of the need for new pipelines and equipment that had boosted factory orders in previous years when prices were closer to $100 a barrel.
Some factories are adapting to these headwinds. But there are signs that manufacturers are adjusting to these changes and slowly boosting output. That could help manufacturing contribute to a stronger economy this year.
Factory orders increased 1.8 percent in June, the Commerce Department reported earlier this month. Much of the gains came from surging demand for commercial aircraft, a volatile sector that can vary widely from month to month.
A key category that serves as a proxy for business investment plans edged up 0.7 percent after declines in April and May. For the first half of the year, this category is down 3.5 percent from the same period a year ago and has dragged overall economic growth.