After a decline in May, U.S. industrial production rose in June, according to the Board of Governors of the Federal Reserve System. New information released by the board on July 17 suggests that production in several industries may be in the midst of a rebound.
June's increase of 0.4 percent was able to overcome a drop of 0.2 percent felt in May. The total index now stands at 97.4 compared to 2007's mark of 100 and is at its highest point this year. Increases in the manufacturing industry led the way, growing 0.7 percent, which evened out a loss of 0.7 percent the previous month. Overall, production has grown 4.7 percent year-over-year from June 2011.
After a spring dominated by disappointing reports, this marks the first signs of optimism in quite some time, according to several analysts. While recent jobs reports remain a concern and the unemployment rate is still above 8 percent, there is belief that these numbers can kickstart the economy back in the right direction. Robert Brusca, president of Fact & Opinion Economics in New York, had predicted an increase and stated that this could be a glimmer of hope for those anxiously waiting for an economic turnaround.
"Production is showing some signs of life," Brusca told Bloomberg reporters. "The bottom line is that if you look at all the data, what you see is an economy that is mixed. The industrial production report is one of the stronger pieces of data we have."
Brusca's assertion may be correct, but it should be remembered that upbeat economic reports do not always translate into positive market performance. As always, investors and financial advisors interested in related ETFs should examine the fundamentals of underlying stocks before investing.
Related ETFs
Industrials Sector SPDR (XLI)
iShares DJ U.S. Industrial Sector (IYJ)
Materials Sector SPDR (XLB)
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