U.S. industrial production rose in May, but factories struggle

June 14, 2019 – U.S. industrial production improved in May, but manufacturers showed weakness despite eking out a slight gain.

The Federal Reserve said Friday that industrial output, which includes factories, utilities and mines, rose 0.4 per cent in May, after tumbling 0.4 per cent in April.

Manufacturing output increased just 0.2% last month, not enough to overcome declines in prior months. Factory production is down 1.5 per cent since the end of 2018, an indication of the potential damage from the import taxes the Trump administration has placed on China.

During the first quarter of this year, motor vehicle production plunged 14.9 per cent. Furniture output fell 5.8 per cent. Clothing production has dropped 22.6 per cent.

Factories’ capacity utilization in May was 75.7 per cent, down from 77.3 per cent in December 2018. The lower utilization levels suggest that factories are seeing less demand than manufacturers had expected.

Production at the nation’s utilities rose 2.1 per cent, caused by increased use of natural gas and electricity.

Production at mines, a sector that also covers oil and natural gas, advanced a modest 0.1 per cent. Gains in oil and natural gas extraction were nearly offset by a decline in drilling.

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