The US auto sector grew 6.6% after six months of decline and boosted industrial production in July

California auto sales (Reuters)

The Industrial production rebounded more than expected in July in the USThanks to the strong consolidation in the auto industry, according to data released on Tuesday by the Federal Reserve (Federal Reserve, the central bank).

industrial branch production It grew 0.6% compared to June, higher than the 0.3% analysts had expected. During July 2021, the increase was 3.9%.

This progress is mainly due to the increase in Automobile and auto parts industry that grew 6.6% after six months of continuous decline. This sector, which is essential in generating employment, has been very turbulent for a year and a half due to the shortage of semiconductors, which has been weighing down the production of vehicles.

The manufacturing sectorwhich accounts for 11.9% of the US economy, is still supported by Strong demand for goods, even as spending gradually shifts towards services. but the Risk increases, as retailers have excess inventoryEspecially clothes.

Manufacturing sector capacity utilization, which measures how well companies use resources, rose half a percentage point to 79.8% in July. It is 1.6 percentage points above its long-term average. The industrial sector’s general production capacity utilization rose to 80.3% last month, up from 79.9% in June. It is 0.7 percentage points higher than its 1972-2021 average.

A car factory in Michigan (Reuters)
A car factory in Michigan (Reuters)

A stronger dollar as a result of tighter monetary policy could increase the cost of US exports. The US central bank has raised interest rates by 225 basis points since March. The tightening of monetary policy has raised fears of a recession, hurting business sentiment.

Meanwhile, consumer demand is being eroded by inflation and rising credit prices, due to higher federal interest rates.

Federal Reserve officials tend to look at measures of capacity use for signs of remaining “slack” in the economy, that is, room for volatility existed before it became inflationary.

Housing construction is located

Housing construction in July fell to him Lowest level in nearly a year and a halfwas affected by higher mortgage rates and building materials prices, indicating that the housing market may contract further in the third quarter.

Tuesday’s Commerce Department report also showed that permits to build future homes fell to a 10-month low, a drop in concentration in single-family homes.

The housing market has been hardest hit by sharp interest rate increases by the Federal ReserveDesigned to calm the economy to control inflation.

Foreman Angel Gonzalez and Anthony Harris, with EZ Bel Construction, work on pipes along Fredericksburg Road during an overheating warning in San Antonio, Texas, US, July 19, 2022. REUTERS/Lisa Krantz
Foreman Angel Gonzalez and Anthony Harris, with EZ Bel Construction, work on pipes along Fredericksburg Road during an overheating warning in San Antonio, Texas, US, July 19, 2022. REUTERS/Lisa Krantz

Home starts fell 9.6% to a seasonally adjusted annual rate of 1.446 million units last month, the lowest level since February 2021. The June data was revised slightly higher, to a rate of 1.599 million units, compared to the previously reported 1,559 million units. The economists surveyed Reuters They had initially expected a decline of 1.54 billion units.

The Federal Reserve who striving to bring inflation back to its 2% target, It has raised its official interest rate by 225 basis points since March. Mortgage interest rates, which move in tandem with US Treasury yields, rose to higher levels.

The average 30-year mortgage was 5.22%, down from 3.22% at the beginning of the year, according to data from mortgage agency Freddie Mac. Fixed residential investment fell by the most in two years in the second quarter and more trouble loomed.

A survey released on Monday showed that the National Association of Homebuilders/Wells Fargo housing market sentiment index fell for the eighth consecutive month in August, below the 50-point break-even level for the first time since May 2020. Rising construction costs and mortgage interest rates were the main culprits. .

With rising costs and labor shortages, construction backlog continued to grow in July

The number of homes approved for construction that had not yet started increased 5.0% to 296,000 units. The family home portfolio increased 2.1% to 146,000 units. The order book should prevent housing construction from collapsing.

(With information from AFP and Reuters)

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