U.S. Industrial Production Up Slightly

However, manufacturing production rose 0.4%

Industrial production edged up 0.1% in May, the second consecutive month with little or no gain, the Federal Reserve reported on June 15.

Manufacturing production rose 0.4% after having fallen 0.5% in April.

The output of motor vehicles and parts has been held down in the past two months because of supply chain disruptions following the earthquake in Japan, the Federal Reserve said. Excluding motor vehicles and parts, manufacturing output advanced 0.6% in May and edged down 0.1% in April.

"The May industrial production report conveys good news about manufacturing activity and should quiet the cacophony of Chicken Littles who mistook the April decline in production (due to the Japanese tsunami impact on autos and electronic and Mississippi flooding) as a sign that a 'recession was coming'," said Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI.

"It is clear that supply chain problems emanating from Japan are still an issue, motor vehicle production fell again in May, but overall manufacturing is robust," he added. "Fourteen of the 20 major manufacturing industries grew last month, led by strong gains in business equipment production. Manufacturing production substantially outperformed the growth in the general economy in the first quarter. In the current quarter, manufacturing activity is decelerating but the fundamentals of pent-up demand for consumer durables, the need for business investment, and export competitiveness will keep the manufacturing sector on a growth path."

Capacity utilization for total industry was flat at 76.7%, a rate 3.7 percentage points below its average from 1972 to 2010.

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