Manufacturing Gains Signal Stability
Washington — Manufacturers boosted production in May for the first time in three months, signaling the worst of the industrial slump is over.
Factory output climbed 0.1 percent after dropping 0.4 percent in April and 0.3 percent in March, according to Federal Reserve data issued Friday in Washington. Another report showed consumer sentiment declined this month from a six-year high.
American households are replacing aging automobiles as more jobs and rising home and stock prices underpin confidence, benefiting manufacturers such as General Motors That means the projected slowing in economic growth this quarter caused by the across-the-board federal spending cuts and cooling global demand will probably give way to a pickup later this year.
“Manufacturing has had a little bit of a rough ride lately, but there is nothing to suggest that will continue,” said Drew Matus, deputy U.S. chief economist at UBS Securities in Stamford, Conn., who correctly projected the gain in factory output. “We may have to build up inventories a little, so that will be a net positive. Continued consumer demand will trump what is happening in the rest of the world.”