U.S. Industrial Production Declines in May, the Second M/M Fall in Three Months
Summary
- May IP -0.2% (+0.6% y/y), led by a 2.9% m/m decrease in utilities output.
- Mfg. IP +0.1%, reflecting m/m gains of 4.9% in auto production and 1.1% in aerospace & misc. transp. equipt. (w/ durable goods up 0.4% and nondurable goods down 0.2%).
- Mining activity edges up 0.1%, the third m/m increase in four months.
- Key categories in market groups mostly drop.
- Capacity utilization down 0.3%pt. to a four-month-low 77.4%; mfg. capacity utilization unchanged at 76.7%.
Industrial production (IP) fell 0.2% m/m in May following an upwardly revised 0.1% increase in April (0.0% initially) and an upwardly revised 0.2% decline in March (-0.3% previously), data from the Federal Reserve Board showed. A 0.0% m/m for May had been expected in the Action Economics Forecast Survey. The year-on-year rate of increase decelerated to 0.6% in May, the lowest since December, from 1.5% in April; nevertheless, it was an improvement from +0.1% y/y in May 2024. The May IP index was at 103.6, slightly down from its recent high of 104.0 in February; however, having remained 2.1% above its recent low of 101.5 in January 2024.
By industry groups, manufacturing production edged up 0.1% (0.5% y/y) in May, the third m/m increase in four months, after a downwardly revised 0.5% drop in April (-0.4% initially). Durable goods production rose 0.4% (0.9% y/y) in May, up for the third month in four, reversing a 0.4% decline in April. This reflected m/m output rises of 4.9% (0.9% y/y) in motor vehicles & parts, 1.1% (5.7% y/y) in aerospace & miscellaneous transportation equipment, 0.9% (2.4% y/y) in electrical equipment, appliances & components, 0.9% (-1.2% y/y) in furniture & related products, 0.9% (4.1% y/y) in wood products, and 0.2% (-1.5% y/y) in primary metals. Notably, aircraft & parts production rose 2.0% (9.9% y/y) in May, the seventh straight m/m rise, on top of a 1.4% increase in April. To the downside, the following durable goods categories fell m/m in May, including output drops of 1.6% (+1.2% y/y) in nonmetallic mineral products, 1.2% (-2.2% y/y) in fabricated metal products, 1.0% (+1.0% y/y) in machinery, 0.4% (-3.9% y/y) in miscellaneous durables goods, and 0.2% (+4.8% y/y) in computer & electronic products.
Nondurable goods production fell 0.2% (+0.4% y/y) in May following a 0.6% decrease in April and two successive m/m increases. The May fall reflected m/m output declines of 1.7% (-0.9% y/y) in printing & related support activities, 1.4% (-2.7% y/y) in petroleum & coal products, and 0.3% (-0.9% y/y) in food, beverages & tobacco. To the upside, the following nondurable goods categories rose m/m in May, including output rises of 2.2% (-3.7% y/y) in apparel & leather goods, 0.8% (-1.6% y/y) in textiles & product mills, 0.6% (-0.5% y/y) in paper, 0.1% (4.1% y/y) in chemicals, and 0.1% (-2.4% y/y) in plastics & rubber products.
Utilities output declined 2.9% (-1.6% y/y) in May, the third m/m decrease in four months, following an upwardly revised 4.9% gain in April (+3.3% initially). In contrast, mining activity ticked up 0.1% (2.9% y/y), up for the third month in four, after a 0.3% April decline (unrevised).
By market groups, construction supplies production slid 0.7% (+1.6% y/y) in May after a 1.2% drop in April and two consecutive m/m rises. Consumer goods output fell 0.2% (-0.5% y/y) in May, the third successive m/m fall, after a 0.3% decline in April, reflecting a 2.0% rebound (-1.9% y/y) in durable consumer goods and a 0.8% drop (-0.1% y/y) in nondurable consumer goods. Materials production declined 0.2% (+0.9% y/y), down for the second month in three, following a 0.5% April gain. To the upside, business equipment output grew 0.8% (2.7% y/y) in May, the seventh straight m/m rise, on top of a 0.2% increase in April.
In special classifications, factory output of selected high-tech industries rose 0.4% (9.8% y/y) in May, the fifth m/m rise in six months, after an upwardly revised 2.8% gain in April (+1.4% initially). Manufacturing production excluding selected high-tech industries inched up 0.1% (0.2% y/y) in May, the third m/m increase in four months, following a 0.6% drop in April, while manufacturing production excluding selected high-tech and motor vehicles & parts fell 0.3% (+0.2% y/y) following a 0.5% April decline and two consecutive m/m gains.
Capacity utilization fell to 77.4% in May, the lowest since January, from 77.7% in both April (unrevised) and March (77.8% previously). The Action Economics Forecast Survey forecasted 77.7%. The May reading was 2.2 percentage points below its long-run (1972–2024) average. Manufacturing capacity utilization held at 76.7% in May and April (76.8% initially); the May rate was 1.5 percentage points below its long-run average.
Industrial production and capacity data are 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.
Winnie Tapasanun
AuthorMore in Author Profile »Winnie Tapasanun has been working for Haver Analytics since 2013. She has 20+ years of working in the financial services industry. As Vice President and Economic Analyst at Globicus International, Inc., a New York-based company specializing in macroeconomics and financial markets, Winnie oversaw the company’s business operations, managed financial and economic data, and wrote daily reports on macroeconomics and financial markets. Prior to working at Globicus, she was Investment Promotion Officer at the New York Office of the Thailand Board of Investment (BOI) where she wrote monthly reports on the U.S. economic outlook, wrote reports on the outlook of key U.S. industries, and assisted investors on doing business and investment in Thailand. Prior to joining the BOI, she was Adjunct Professor teaching International Political Economy/International Relations at the City College of New York. Prior to her teaching experience at the CCNY, Winnie successfully completed internships at the United Nations. Winnie holds an MA Degree from Long Island University, New York. She also did graduate studies at Columbia University in the City of New York and doctoral requirements at the Graduate Center of the City University of New York. Her areas of specialization are international political economy, macroeconomics, financial markets, political economy, international relations, and business development/business strategy. Her regional specialization includes, but not limited to, Southeast Asia and East Asia. Winnie is bilingual in English and Thai with competency in French. She loves to travel (~30 countries) to better understand each country’s unique economy, fascinating culture and people as well as the global economy as a whole.
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