US manufacturing output unchanged in June, but accelerates in second quarter

WASHINGTON, July 17 (Reuters) - U.S. factory ‌production was unchanged ​in ​June, but grew at a robust pace in the second quarter, driven by an artificial intelligence build-up and businesses accumulating inventory in anticipation of ‌shortages and higher prices due to the war in the Middle East.

The ⁠flat reading in manufacturing output last month reported by the Federal Reserve on Friday followed an upwardly ‌revised 0.1% gain in May. Economists ‌polled by Reuters had forecast production edging up 0.1% after a previously reported unchanged reading in May. Output increased 1.1% year-on-year in June.

It grew at a 4.7% ​annualized rate in the second quarter, the fastest in five years, after expanding at a 1.4% pace in the January-March quarter.

Businesses are spending heavily on AI, keeping ⁠manufacturing, which accounts for about 9.4% of the economy, afloat. Motor vehicles and parts production rose 0.7% over the ​month. Though output of computers and peripheral equipment fell 0.5%, it increased 9.2% year-on-year and rose at a 7.2% rate in the ​second quarter. Production of communications equipment increased 0.7% ‌in June and grew at a 9.6% rate last quarter.

Output of semiconductors and related electronic components rose 0.5% last month and increased at ⁠a 10.2% pace in the second quarter. Production of long-lasting manufactured goods slipped 0.1% over the month, offseting a 0.2% gain in the output of non-durable goods.

Mining production rose 0.4% last month ⁠after increasing 1.1% in May. Energy output increased 0.5%, with oil and gas well drilling rising 0.3%.

Utilities ​production rebounded 0.4% as higher temperatures boosted demand for air conditioning after dropping 0.7% in May.

Overall industrial production edged up 0.1% last month after rising by the same margin in May. Industrial output ‌increased 1.1% on a year-over-year basis in June. It grew at a 4.0% rate in the second quarter.

Capacity utilization for the industrial ‌sector, a measure of how fully firms are using their resources, was unchanged at 76.1 in ⁠June. It is 3.3 percentage points ‌below its 1972–2025 average. The ​operating rate for the manufacturing sector dipped to 75.7% from 75.8% in May. It is 2.5 percentage points below its long-run average.

(Reporting By ‌Lucia Mutikani)

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