In response to the COVID-19 pandemic, countries have had to temporarily limit or completely shutter parts of their economies. While this has led to expected drops, the ongoing reopening processes have some optimism for a rebound. Recent data from the Federal Reserve could point to this optimism becoming a reality.
According to recently released data, the Federal Reserve stated that industrial production, which includes output at factories, mines, and utilities, rose 5.4% month over month. This is the highest rate in the U.S. since 1959. These numbers also exceeded initial estimates by Bloomberg which placed the rate at 4.3%.
In January, U.S. manufacturing declined by 0.4%, before slightly increasing by 0.1% in February. However, in March and April, the impacts of the COVID-19 pandemic were really felt, as manufacturing dipped by 4.6% in March and plummeted by 12.5% in April. In May, as the first efforts to reopen began, the rate rose by 1.4% in May, before surging by 7.2% in June.
The numbers for June are the highest they have been since 1946. Much of this is due to the rebounding auto industry, which has seen many of its factories reopen and begin to take up pre-COVID level shifts. Utility output for the month also jumped by 4.2%.
Still, there were some sectors which saw a decline. Mining, oil, and gas production fell by a combined 2.9%. The index for oil and gas well drilling also fell by 18% during the previous month. Michael Pearce, a senior U.S. economist at Capital Economics, said that the improved production was due to a desire for “reopened factories to catch up with the surprisingly strong initial rebound in consumption.”
These gains come at a time where the COVID-19 outbreak continues to be trending towards another possible shutdown. As infection and death rates rise in the U.S states such as California, Texas, Oregon, and Florida, which has become the major epicenter for the disease in the country, as rolling back reopening processes. Analysts are concerned that another wave of shutdowns could effectively derail any of the gains made since the end of March.