Amidst all the growing concerns over a double-dip recession, the manufacturing sector has stood out as one of the U.S. economy’s strongest performers. In fact, manufacturing has been the only major sector to come anywhere close to textbook V-shaped recovery. That good fortune continued during July, with industrial output surging 1.1 percent from the prior month and roughly 8 percent from last year. The auto industry contributed to the bulk of last month’s growth, but traditional manufacturers (excluding autos) posted a solid increase in output. Rising manufacturing output has helped to bring idled production capacity back on line as the national average factory operating rate surpassed 72 percent for only the first time since October 2008. With all that said, manufacturing activity still has a ways to go before returning to pre-recession levels of output and capacity utilization; moreover, with the inventory rebuilding cycle on its last legs and the ongoing sluggishness in consumer spending, manufacturers will have to lean on business capital spending and export demand as their key sources of support.

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