Don't write-off the U.S. economic recovery just yet. The nation's industrial sector, which has led the expansion but cooled recently, showed signs of renewed life in July, with industrial production climbing a better-than-expected 1%, the U.S. Federal Reserve announced Tuesday.

Capacity utilization jumped to 74.8% in July from 74.1% in June. The 74.8% utilization rate is 5.7% higher than a year ago, but is still 5.7 percentage points below its 1972 to 2009 average of 80.5%.

A Bloomberg survey had expected industrial production to rise 0.6% in July and the capacity utilization rate to rise to 74.5%. Industrial production fell 0.1% in June and rose 1.3% in May.

Manufacturing Output Rose Sharply in July

July's rise in industrial production is especially encouraging because it was concentrated in the manufacturing and mining sectors. Manufacturing output, aided by increased vehicle production from a rebounding U.S. auto sector, increased 1.1%. Mining output increased an impressive 0.9%.

Utilities output, which surged 2.3% in June and dominated that month's industrial activity, rose just 0.1% in July.

Industrial production rose 6.6% in the second quarter, slightly lower than the 7% gains recorded in both the first and fourth quarters of 2009.

A Data Point for the Market's Bulls

July's industrial production totals represent good news for stock market bulls. The housing sector may be sluggish, and retail sales may be tepid, but activity in the nation's industrial sector is still increasing at a healthy rate, and last month's data have lessened concern that activity in the sector that's led the recovery to date is slowing.

Although it's theoretically possible for the economy to grow for years with tepid industrial activity, historically a strong industrial sector has accompanied every robust U.S. economic expansion. And it's easy to understand why: Manufacturing jobs usually pay higher wages than most service sector jobs. That usually leads to rising median and disposable income -- creating the increasing demand that's critical for a sustained economic expansion.

Since housing construction is unlikely to serve as a growth engine in the current expansion (due to the large supply of unsold homes left over from the burst housing bubble), strong conditions in the industrial sector could prove to be critical in the quarters ahead.

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Matthew

If just 10% of the car buying public would buy Ford or GM next month, instead of buying cars from foreign countries that used to be our enemies, the US economy would surge! Simple as that.

August 18 2010 at 3:18 PM Report abuse +1 rate up rate down Reply
bach

Under employment is still around 17 percent, not counting the illegals out of work too. Your democrats are masters at deflection.

August 18 2010 at 6:51 AM Report abuse -1 rate up rate down Reply
bach

Democrats have a problem with the truth. they prefer to deflect, lie and enable poverty to keep their seats.

August 18 2010 at 6:49 AM Report abuse -1 rate up rate down Reply
bach

1 percent is NOT a surge. it is restocking very low inventory levels.

August 18 2010 at 6:44 AM Report abuse rate up rate down Reply
hello you dope

There are two reasons the country is in the shape it's in One is Democrats the other is Republicans. If they took care of the peoples business as hard as thier re-election we might be economically viable again.Don't blame one or the other. BLAME THEM BOTH!!! AND PUT TERM LIMITS IN PLACE.

August 18 2010 at 5:30 AM Report abuse +3 rate up rate down Reply
MSmailbox

I can honestly say, that I am better off than two years ago! I should qualify that, by saying that I lost over $500 K in 2009, when TARP raped the banks, but in non-material terms, I do feel better. I have only $40 K left, out of $540 K that my father left me (and my S.S.D.I.). I mean, who would have thought that they'd change the rules in the middle of the game? If I got to make up the rules as I went along, I could beat anyone, at Scrabble. So, if you exclude money from the picture, I am better off... Less medication, less money to manage, more free time and no feeling of FEAR, like during the Bush years. If I had my choice, I'd take life over money, so I see several positives in the Obama White House. I was in favor of better regulation of banks, Wall Street and businesses, but HOLY COW, President Obama came on like he was trying to enrage the people against business of any kind. You just don't talk that way to CEO's and people whose lives are wrapped up in vast responsibilities. He scared the pis* out of anyone who would even think of investing in new factories, infrastructure, commerce and trade. The level of uncertainty was so high, during his first five months (2009), that people just balked and walked. The same review of procedures and regulations could have occurred, without the "revolutionary" crap. "If you go carrying in pictures of Chairman Mao, you ain't gonna make it with anyone, anyhow." Lennon (John). Soemtimes, you can get even more than you bargained for, by simply being civil and NOT trying to rev public opinion, this way and that. We just want a decent, stable life, without all the Republican FEAR and Democratic ANGER... Mr. President, we don't want politicians to go "loose-cannon" on the establishment. These types of things are better left in our dreams, from the sixties. So far, Obama has not hurt me, except for the 90% of my inheritance, which was torched. Yes, it still hurts me a bit (each day), but I'm not thinking suicide. Life is still wonderful and by the looks of the "reality view port," we are gearing up! Good people, in large numbers, can bring the type of "change" that we want. Honesty, respect and fairness, must be rebuilt, not whipped-up like a Bavarian political rally! Good people are at the foundation of this country, weary and worried, but good people who are speaking out, volunteering and not accepting failure as an option... We are in the best of times, lets get our software out of the funk and run... If I get well enough to return to work (HP/EDS/GM), I intend to do a little sabre-rattling, too, but not at the expense of the goal, which is a healthy, wealthy and wise country, respected around the world... Btw, we have survived the most tumultuous economic blast in my 52 years of life. Kind of like WWII on Wall Street, except that WE ARE WALL STREET! OK, enough on friendly fire (of the current administration) and the hellish fear-mongering, of the last one. Suppport good people and good works... Make our neighborhoods clean and safe. Save the drama and theatrics for Hollywood, and autobiographies. WE are recovering, by the will of our own American spirit for victory! You cannot keep a good American down. We'll go through these obstacles, "like crap through a goose." We have fallen and gotten back up, enough times, that our enemies are hiding in discouragement. Oh yeah, and this mosque near ground-zero, is a bad idea (I think brevity speaks volumes, since I am almost never, succinct.) The mosque on ground-zero is a bad idea.

August 18 2010 at 4:38 AM Report abuse rate up rate down Reply
2 replies to MSmailbox's comment
gopditzs

Hang in there guy! Sorry about you getting ripped off by the Wall Street Crooks with the help of the Bush Crime Family and its many enablers! The biggest redistribution of wealth ever occurred under Bush when the Average Persons 401K's and Meager Inheritances turned to dust ( I know very large and meaningful to you and your late father ) as the Wall Street Crooked Titans received 100's of Millions in Pay for failing and as the Titans with bonus's in hand for failing redistributed their Failure/Debts upon the Tax Payer with Bush and his cronies help! Sad thing is we have seen zero real investigations in to the orchestrated financial looting of America and its Citizens Investments. It is obvious there is no justice system for the Super Wealthy other than a token indictment here and there of which 98% of the time the person gets off or does a few month. Glad you are able to keep a positive out look with all you are dealing with and how rough and to be honest hateful many are to the disabled who are forced to go on disability. It is no fun sitting at home alone with no money and no friends to do things with and feeling so bad that you likely could not do much anyway!

August 19 2010 at 7:23 AM Report abuse +1 rate up rate down Reply
teampdf

Oh, sorry ... one more thing ... how's this for your recovery (and ya can't blame Bush cause Obama & Crew are running GM) GM quietly announced (whispered actually) that it was going to invest in and open a new production line plant for trucks ...... IN MEXICO .... three cheers for the Obama recovery!!!!!

August 18 2010 at 2:43 AM Report abuse -3 rate up rate down Reply
john

Here is our liberal Obama friendly media trying to lie to us by telling us what we know isn't true. Housing and consumer spending is down, way down. It's lower than the Depression of the 1930's. This is the worst economy that me or my father experienced and he was born in 1930. Obama is a sham.

August 18 2010 at 2:41 AM Report abuse +1 rate up rate down Reply
1 reply to john's comment
scottf828

Your comments would be more meaningful if you would explain why the Bush recession was Clinton's fault, but the Obama recession isn't Bush's fault. Your comments would be more substantive if you could explain how a president who inherits a recession, whether it be Reagan, Clinton, Bush or Obama turns the situation around in 18 months. It didn't happen with Reagan, and the public and media wrote him off in 1983. His wife muttered to people that he probably wouldn't run for re-election in 1984. This was at least 24 months after he had taken office. Reagan proceeded to raise taxes to counter-balance the effects of his original huge tax-cuts and huge increases to military spending the federal deficit - in other words: Reagan's Big Government Republican agenda that focused on building up the military, building more prisons and restricting women's rights. People were out of work, and it did not look good for the US or for dear Reagan. Is it too much to expect a dot-to-dot, conditioned, jargon-thinker ("liberal media", blah, blah) to truly examine history or to look beyond current statistics and analyze how we got where we are and how we get out of it. P.S. There is nothing wrong with the word "liberal". People who advocate "free" trade are liberals on trade. Protectionists are conservative in their approach. Gosh, I guess you are a "liberal". Be careful, you might get "koodies" and people might think you are "gay".

August 18 2010 at 4:16 AM Report abuse +1 rate up rate down Reply
teampdf

USA auto production for 2010 models basically stopped because dealers were choked with inventory on their lots that was not selling ... sooo they put the breaks on production to get rid of inventory. Of course they are producing in a spurt again because the 2011 models are hitting showrooms! Selling them is another thing, production is running, but selling is another thing. More and more people are out of work and mortgage defaults continue to rise. There is no recovery remotely in sight. Utilities output??? It's been Hot & Dry everywhere of course output is up. Wait till winter and the unemployed can't pay their heating bills, just wait .. How are ALL those "Shovel Ready Stimilus Fund Jobs" working out for you knuckleheads who Obama scammed? Oh, sorry ... that's right Bush and Cheney stole all the shovels and sold them ... right?? Anyone who thinks Obama is doing a Great Job has to be highly medicated on mind altering drugs and should put the Kool Aid pitcher down ... you're in outer space and failing to accept reality ... are you seriously and honestly better off now than you were 2 years ago? NO YOU'RE NOT, No One Is and that's the truth!

August 18 2010 at 2:28 AM Report abuse +1 rate up rate down Reply
1 reply to teampdf's comment
calderasf

I guess you have to live in a blue state as we in San Francisco have lots of shovel ready projects beign done. We've had roads paved, a new Doyle drive, the approach to GG bridge, being built and so on. So I guess you just had to vote Democratic to get all these jobs.

August 18 2010 at 3:08 AM Report abuse rate up rate down Reply
mrskrip

what did we do make more hamburgers this month ,,,this is a joke .....

August 18 2010 at 2:12 AM Report abuse +3 rate up rate down Reply