The goods producing sector had a surprisingly poor June. A 1.1 percent monthly contraction was much steeper than expected and reversed almost all of May's 1.2 percent gain. Annual growth slowed from 4.9 percent to 2.5 percent, the weakest print since March.
The monthly fall in overall production was more than matched by the key manufacturing sector where output was off 1.4 percent, its first decline since December last year. In fact, weakness was broad-based with capital goods down 1.9 percent, intermediates 1.2 percent and consumer goods 0.7 percent. With construction also sliding 1.0 percent, the only advance was in energy where production expanded 1.4 percent.
However, earlier strength meant that June's drop in industrial production had only a limited impact on the second quarter as a whole. Compared with January-March, output grew a very solid 1.8 percent, up from an already impressive 1.2 percent increase in the first quarter. As such, the goods producing sector provided a healthy boost to real GDP growth over the period and, if the PMI survey is anything to go by, continued to do so at the start of the current quarter. This is just as well because recent signals from services have not been promising.