U.S. industrial production numbers came in with the April figures up 0.4%, as expected. Capacity utilization remains subdued at 75.5%.

BMO Nesbitt Burns says that U.S. industrial production is “clearly on the mend”. It notes that this is the fourth straight monthly gain, and was led by a 3.1% increase in motor vehicles. “However, with 60% of industries now advancing, the breadth of the rebound in production is quickly improving, providing a solid foundation for the turn in activity.”

“Consumer spending remains at lofty levels and is showing signs of leaving producers with no choice but to crank up production. Selling out of inventories is quickly becoming a non-option,” says RBC Financial Group. “Today’s business inventories report for March revealed that businesses decreased stocks of inventories by 0.3% and that the inventory-to-sales ratio, a good indicator of how well a firm is matching up supply with demand, fell and now sits at a comfortable level relative to historical norms. With inventories no longer out of line with sales and production running behind sales levels, the future for industrial production, employment gains and overall GDP growth is starting to look better in the United States.”

Bank of Montreal says that the capacity utilization rate still indicates plenty of slack in the goods-producing sector. “These are not exactly levels that will ignite capital spending, but also far below levels that would generate any concern over inflation,” says BMO Nesbitt Burns.

“U.S. factory activity has turned the corner and is on the mend. As well, the healing process is spreading to a broader group of sectors, suggesting that job and capital spending cuts may end soon,” concludes BMO Nesbitt.