U.S. manufacturing’s long road to recovery - ING

James Knightley, Chief International Economist at ING, notes that the U.S. industrial production came in exactly in line with market expectations, rising 3% month-on-month. 

"Manufacturing was up 3.4%, led by autos (+28.3%) with ex-autos posting a 1.6% gain. Utilities rose 3.3% as hotter than usual weather led to more electricity demand with AC units staying on longer and working harder. Rounding out the details, mining rose 0.8% although oil and gas drilling fell another 8% to leave that component 71.5% down YoY."

"Overall it is a decent outcome, but we caution that manufacturing output is still more than 8% lower than the most recent high in December."

"The scope for further large gains on factory re-opening appears limited so additional gains will be determined much more by underlying economic fundamentals. Based on the high-frequency consumer sector data there is evidence of a plateauing in the recovery and it will be hard for the manufacturing sector to buck that trend."

"In any case with capacity utilisation at relatively low levels (70.6% versus an average of 78% through 2019) corporate profitability remains under pressure which will constrain business appetite for investment and creating jobs."