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Economy in Brief

U.S. Industrial Production Slips Unexpectedly
by Tom Moeller  June 15, 2018

The Federal Reserve reported that industrial production eased 0.1% (+3.5% y/y) during May following a 0.9% April rise, revised from 0.7%. A 0.2% increase had been expected in the Action Economics Forecast Survey. Factory sector production declined 0.7% (+1.7% y/y) and reversed April's 0.6% gain, revised from 0.5%. Utility output strengthened 1.1% (4.0% y/y) after a 3.2% increase. Mining production improved 1.8% (12.5% y/y) following a 1.0% improvement.

The surprising decline in production partially reflected a 1.0% fall (+1.5% y/y) in consumer goods output which reversed the prior month's increase. Durable consumer goods production declined 3.0% (0.0% y/y) after a 0.8% fall. Automotive product output declined 5.5% (-1.5% y/y) following a 1.9% shortfall. Computer, video & related production improved 0.8% (4.7% y/y) after a 0.1% uptick. Appliance, furniture & carpeting production fell 1.2% (-1.5% y/y) and countered the prior month's 1.7% rise. Nondurable consumer goods production fell 0.4% (+1.9% y/y) following a 1.5% gain. Energy product output weakened 1.6% (-0.2% y/y) after a 3.7% increase. Apparel production declined 1.9% (0.0% y/y) after a 2.4% gain. Paper product output weakened 1.1% (-2.2% y/y) after a 0.8% increase. Food & tobacco production fell 0.3% (3.1% y/y) following a 1.1% improvement. Working the other way, chemical product production rose 0.5% (2.8% y/y) after a 0.4% gain.

Production of business equipment declined 1.1% last month (+1.0% y/y) and reversed April's 1.1% rise. Transit equipment production fell 3.5% (-2.9% y/y) following a 0.3% dip. Production of information processing equipment slipped 0.1% (+4.8% y/y) following four straight months of strong increase. Industrial equipment & other equipment production fell 0.4% (+1.4% y/y) after a 1.8% rise.    

Construction supplies output notched 0.1% higher (3.6% y/y) after a 0.5% increase.

Production of materials improved 0.5% (5.5% y/y) after a 0.9% increase. Energy product materials output increased 2.0% (11.0% y/y) after two months of roughly 1.2% gain. Durable goods materials output fell 0.8% (+2.7% y/y) following a 0.5% rise and nondurable goods materials held steady (0.9% y/y) following a 0.9% gain.

In the special aggregate groupings, production of selected high-technology industries rose 0.2% (6.3% y/y) following a 1.8% jump. Nonenergy production excluding high-tech retreated 0.6% (+1.7% y/y) and reversed a 0.6% rise. Factory sector production excluding both high-tech and autos eased 0.2% (+1.9% y/y) after a 0.8% strengthening.

Capacity utilization eased to 77.9% from its three-year high of 78.1%. Factory sector capacity utilization declined to 75.3%, the lowest level since January. Manufacturing sector capacity increased 1.0% y/y.

Industrial production and capacity data are included in Haver's USECON database, with additional detail in the IP database. The expectations figure is in the AS1REPNA database.

Industrial Production (SA, % Change) May Apr Mar May Y/Y 2017 2016 2015
Total Output -0.1 0.9 0.5 3.5 1.6 -2.0 -1.0
Manufacturing -0.7 0.6 -0.1 1.7 1.2 -0.8 0.1
    Consumer Goods -1.0 1.0 0.4 1.5 0.0 0.7 1.5
    Business Equipment -1.1 1.1 0.1 1.0 3.2 -5.3 -2.0
    Construction Supplies 0.1 0.5 -1.0 3.6 2.5 0.9 0.6
  Materials 0.5 0.9 0.8 5.5 2.0 -3.0 -1.5
Utilities 1.1 3.2 4.1 4.0 -1.3 -0.4 -0.8
Mining 1.8 1.0 1.4 12.5 6.4 -9.7 -3.4
Capacity Utilization (%) 77.9 78.1 77.5 76.2 78.1 75.4 77.3
 Manufacturing 75.3 75.9 75.5 74.8 74.8 74.6 75.8
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