The U.S. economy is trying to bounce back to normal and signs are that the recovery will be faster than expected given the pace of vaccination. This has seen industrial production increasing at a fast pace.
Industrial production increased in May after taking a battering last year due to the COVID-induced lockdown that saw factories and plants shuttered for almost two months. That said, industrial production has been on the rise over the past few months and the momentum is likely to continue as the economy reopens further.
Industrial Output Rises
The Federal Reserve said on Jun 15 that on a year-over-year basis, industrial production grew 0.8% in May, after increasing a modest 0.1% in April and surpassing analysts’ expectations of 0.6%. Industrial production includes output at factories, mines and utilities.
Manufacturing output increased 0.9% in May driven by automobiles and auto parts. Production at automobile factories jumped 6.7%, while automobile assemblies soared to 9.9 million units last month.
Capacity utilization for the manufacturing sector increased 0.6% in May to 75.2%, while overall capacity utilization for the industrial sector rose 0.6% to 75.2%. Manufacturing accounts for nearly 11.9% of the total U.S. economy. The sector is being supported lately by the huge coronavirus relief stimulus, low interest rates and continued higher demand for goods.
Production at mines rose 1.2% in May after gaining 0.7% in April.
Economy Recovering Faster Than Expected
The massive fiscal stimulus and broad-based vaccination drive have given people both confidence and power to make purchases. The government too has been relaxing restrictions in a bid to reopen the economy further.
The economy grew a robust 6.4% in the first quarter, which proves its underlying strength. Moreover, economists expect economic expansion at a double-digit pace in the second quarter, which is likely to be driven by strong industrial and manufacturing output.
Manufacturing activity has been gathering steam in the United States ever since the economy started reopening. Earlier this month, the Institute of Supply Management said that manufacturing activity jumped to a reading of 61.2% in May. This was the 12th consecutive monthof increase and the momentum in manufacturing is likely to continue given the upbeat sentiment of both the people and the government.
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. the complete list of today’s Zacks #1 Rank stocks here Caterpillar Inc. ( CAT Quick Quote CAT - Free Report) is the largest global manufacturer of construction and mining equipment. Given that it serves a gamut of sectors — infrastructure, construction, mining, oil & gas, and transportation — the company is considered a bellwether of the global economy.
The company’s expected earnings growth rate for the current year is 46.3%. The Zacks Consensus Estimate for current-year earnings has improved 18.4% over the past 60 days. The company carries a Zacks Rank #2.
Deere & Company ( DE Quick Quote DE - Free Report) is the world’s largest producer of agricultural equipment, manufacturing agricultural machinery since 1837 under the iconic John Deere brand.
The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 10.8% over the past 60 days. The company has a Zacks Rank #2.
Dover Corporation ( DOV Quick Quote DOV - Free Report) is an industrial conglomerate producing a wide range of specialized industrial products and manufacturing equipment.
The company’s expected earnings growth rate for the current year is 23.1%. The Zacks Consensus Estimate for current-year earnings has improved 7.1% over the past 60 days. The company has a Zacks Rank #2.
Graco Inc. ( GGG Quick Quote GGG - Free Report) manufactures, designs and sells equipment and systems used to measure, move, control, spray and dispense fluid as well as powder materials.
The company’s expected earnings growth rate for the current year is 26.7%. The Zacks Consensus Estimate for current-year earnings has improved 5.6% over the past 60 days. The company has a Zacks Rank #2.
Barnes Group, Inc. ( B Quick Quote B - Free Report) is a global diversified manufacturer and provider of highly engineered products, innovative solutions and differentiated industrial technologies.
The company’s expected earnings growth rate for the current year is 16.5%. The Zacks Consensus Estimate for current-year earnings has improved 6.1% over the past 60 days. The company has a Zacks Rank #2.
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