U.S. Industrial Production Increase Is Weaker Than Expected in May
by:Tom Moeller
|in:Economy in Brief
Summary
• 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.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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