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Economy in Brief

U.S. Industrial Production Increase Is Weaker Than Expected in May
by Tom Moeller  June 17, 2022

• Factory output eases.

• Motor vehicle output improves.

• Capacity utilization increases slightly.

The rate of improvement in factory sector activity slowed during May. Industrial production rose 0.2% after increasing 1.4% in April, revised from 1.1%. It was the weakest increase since a 0.2% decline in December of last year. A 0.4% increase had been expected in the Action Economics Forecast Survey.

Manufacturing output dipped 0.1% (+4.8% y/y) following an unrevised 0.8% April gain. Utilities output improved 1.0% last month (8.4% y/y) following a 5.5% increase. Mining output improved 1.3% (9.0% y/y) in May after rising 1.1% in April.

The slip in manufacturing output in May reflected uneven industry performance. Output of durable goods fell 0.2% (+6.6% y/y) after increasing 1.2% in April. Machinery production declined 2.1% (+3.3% y/y) following a 1.7% rise. Electrical equipment production fell 1.8% (+2.2% y/y) after easing 0.4%. These declines were offset by a 0.7% increase (11.6% y/y) in motor vehicle & parts production after two straight months of strong increase and a 1.2% gain (8.5% y/y) in furniture production following two straight months of decline.

Nondurable goods output edged 0.1% higher (3.0% y/y) in May following a 0.3% rise as chemical production also improved 0.1% (2.6% y/y) following a 0.6% gain. Apparel production rose 0.9% (-0.5% y/y) after increasing 0.3% in April but paper output fell 0.3% (+1.0% y/y) following no change. Petroleum & coal production strengthened 2.5% (4.8% y/y) after holding steady In April.

In the special classifications, factory output of selected high technology industries improved 0.7% (4.1% y/y) after declining 1.0% in April. Factory production excluding the high technology sector slipped 0.2% (+4.9% y/y) after rising 0.9% in April. Manufacturing production excluding both high tech and motor vehicles slipped 0.2% (+4.4% y/y) after a 0.6% April increase.

Capacity utilization rose to 79.0% in May, the highest level since December 2018, from 78.9% In April. A 79.2% rate had been expected. Utilization in the factory sector edged down to 79.1% in May from 79.2% in April, which was the highest reading since April 2007.

Industrial production and capacity are located in Haver's USECON database. Additional detail on production and capacity utilization can be found in the IP database. The expectations figures come from the AS1REPNA database.

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