Last month here, Robert Brusca described strength in industrial production in April, and he wondered how it could keep up if demand weren't stronger as well. The May reports on production and retail sales have helped resolve this question. Wednesday's retail sales data showed a 1.4% surge in sales, while today's report on industrial production revised away some of its gain in April and showed it flattening completely for May. Now, production is seen up 0.4% in April instead of 0.7% calculated initially.

Some of the May slowing in production came from weather-related moves in utility output. It fell 1.2% after surging 3.3% during April, which was the coldest April in 10 years. Factory output inched up 0.1%, following a reduced increase of 0.2% in May, cut from 0.4% reported before. Mining activity, by contrast, turned up by 0.4% after falling 0.6% in April.

These developments take some of the steam out of industry now in Q2 compared with what Mr. Brusca observed a month ago. But they don't really look worrisome to us. To get some perspective, we can look at the "special aggregates" menu among the IP data. Growth continues in the high-tech industries. While a 3-month growth rate, at 10% this month, is less than half the pace for most of last year, it is up from a recent low of 8% in February and computers themselves expanded at an 18% pace over both the last 3 months and the last year. Motor vehicles are trying to come back; after six consecutive quarters of decline, the sector presently looks poised for about a 6% advance this quarter. Consumer goods apart from energy, high tech and vehicles eased this month, but good gains in March and April put them on a course for modest improvement. Business equipment (also excluding high-tech) has experienced some hesitation of late, but looks more steady than about to fall off a cliff. The most impressive of these sectors to us is construction materials. Production of these items is rising off its low in February. The increases have not been large, but they give the impression of stabilization, not the onset of some downward spiral that might have been expected with the drop in homebuilding.

So US industry is diversified and resilient. And, given the cost of energy and the highest interest rates in about five years, this seems quite remarkable.