Industrial production rises but manufacturing flat

Industrial production ticked up 0.3% in June as the mining and utilities sectors saw a boost from an increase in crude oil extraction.

The index of manufacturing, mining and utilities increased slightly in June after falling 0.2% in May, the Federal Reserve said Wednesday. That beat estimates of 0.2% growth compiled by a Bloomberg survey of economists.

The increase was led by a 1% month-over-month jump in mining and a 1.5% rise in utilities. Meanwhile, the manufacturing segment still struggled to take off as a dip in auto production offset gains from other producers.

In addition to posting output gains, mining and utilities producers are using more of their business' capacity: Miners used 84.1% of the mine's capacity in June, up 0.7 percentage points, while the rate for utilities increased 1.2 percentage points to 80.7 percent, the Federal Reserve said.

At the same time, manufacturing output was unchanged for the month. Short-term supplies like chemicals saw small gains of 0.7% or less, and longer lasting goods like computers, electronics and furniture were also on the rise.

But a major group of goods - cars and car parts - saw output decline 3.7% after a three-month rally. Excluding autos, though, total manufacturing rose 0.3% suggesting that "the negative impact from the earlier appreciation in the dollar may be fading," said Steve Murphy, economist at research firm Capital Economics.

Murphy expects motor vehicle output to bounce back soon, based on the assembly line schedules from the key manufacturers and the strength of sales.

The monthly Industrial Production index, which measures both production and the level at which factories are currently using their capacity, is closely followed in financial markets as a barometer of the health of manufacturers and the direction of the business cycle.

With rough start to 2015 in the rear view mirror, Wednesday's uptick comes after months of malaise in the American industrial sector. Several major winter storms hit the Northeast, and falling oil prices in late 2014 led oil and gas producers to cut back on industrial supplies. A disparity between the dollar and foreign currencies like the euro made U.S. exports more expensive, presenting a challenge for multinational companies.

Despite challenges, the index is now 1.5% above its year-ago level.