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Data released on Friday showed that Industrial Production rose 3% in July, in line with market expectations. The manufacturing sector has seen a relatively strong recovery this cycle, underpinned by consumers shifting spending toward goods, explained Wells Fargo’s economists. They see that business goods have been slower to recover.

Key Quotes: 

“The manufacturing sector’s recovery continued in July, but at a slower place. Output at factories rose 3.4% after June’s 7.4% gain. Once again, autos led the charge as the sector has seen a relatively quick recovery as consumers shun mass transit.”

“The need to social distance has shifted household spending away from services to goods. Production of consumer products rose 4.6% in July, and is only 2.4% below February levels.”

Production for business equipment increased 5.0% in July. Gains broadened beyond information processing. Yet, output for business goods has proved slower to recover with uncertainty about the pandemic and election likely holding back outlays.”