U.S. manufacturing output climbs for second month in June

WASHINGTON (Reuters) - U.S. manufacturing output accelerated in June, climbing for the second straight month, thanks in large part to increased production of motor vehicles and parts.

The Federal Reserve said Tuesday manufacturing production rose 0.4% last month, above the 0.2% expected by analysts in a Reuters poll.

The June numbers were stronger than the 0.2% growth seen in May, which had been the first growth of 2019 after several months of manufacturing declines or unchanged conditions.

The data could ease lingering concerns about the strength of the U.S. factory sector in the face of a slowing global economy. The June gains were the largest for the sector since December.

Despite recent monthly gains, the manufacturing sector is down 2.2% for the second quarter, its biggest quarterly decline since the second quarter of 2016.

The Fed said the manufacturing boost was significantly driven by a 2.9% increase in motor vehicle and parts production. Without it, manufacturing output only grew 0.2%.

Overall, industrial production was unchanged in June, and was down 1.2% for the second quarter, the second consecutive quarterly decrease.

The production of nonmetallic mineral products was up 1.1% in June, while the production of machinery and electrical equipment and appliances both fell by 1%.

Gains in manufacturing as well as mining, which was up 0.2% in June, offset a 3.6% decline in output by utilities, as milder summer temperatures reduced the need for air conditioning.

Capacity utilization for the manufacturing sector, a measure of how fully firms are using their resources, also climbed to 75.9% in June from 75.6% in May.

Overall capacity utilization dropped to 77.9% in June, and stands 1.9% below its 1972-2018 average.

Officials at the Fed tend to look at capacity use measures for an indication of how much more the economy may be able to grow before inflation becomes a concern.

Editing by Bernadette Baum