Manufacturing Output Up 0.1% In May

June 15, 2007
Industrial production overall unchanged in May.

After a downwardly revised increase of 0.4% in April, industrial production was unchanged in May, according to U.S. government figures released June 15. Output in the manufacturing sector edged up 0.1% in May.

Mining output moved up 0.5% after declining 0.6% in April. The output of utilities fell 1.3% in May after being elevated in April because of unusually cold temperatures.

At 112.7% of its 2002 average, overall industrial production for May was 1.6% above its year-earlier level.

The rate of capacity utilization for total industry fell 0.2 percentage point, to 81.3%, a level 0.3 percentage point above its 1972-2006 average.

The weaker than expected report on manufacturing growth for May suggests that while the industrial sector has basically weathered the impact of a housing and motor vehicle induced inventory adjustment, sluggish economic growth and muted business investmentdemand are likely to make 2007 and early 2008 a less than exciting period for factory output growth, said Cliff Waldman, economist for the Manufacturers Alliance/MAPI.

Weak readings onindustrial equipment and non-energy material output for May are indicative of a sector that has shifted into a period of more conservative activity. Looking forward, slower U.S. growth, the risky situation in the U.S. housing market, and rising interest rates, which will have a negative impact on capital spending, in tandem with the positive impact of still strong global demand are,collectively, likely to result in a continued factory expansion, but at a somewhat slower pace, Waldman said.

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