US Factories Increase Production by 0.6% in May

June 16, 2014
Manufacturing output increased 0.6% in May as U.S. factories showed a broad recovery after soft results in April, the Federal Reserve reported today.

Manufacturing output increased 0.6% in May as U.S. factories showed a broad recovery after soft results in April, the Federal Reserve reported today.

The central bank also revised its April manufacturing decline, from the 0.4% originally reported to 0.1%.

Overall industrial production rose 0.6% in May, slightly exceeding analysts' predictions of 0.5% growth, with mining output up 1.3% and utilities off 0.8%. Industrial production was up 4.3% from May 2013 and stands at 103.7% of its 2007 average.

Durable goods production showed particular strength in May, as explained by Chad Moutray, chief economist for the National Association of Manufacturers:

“In May, durable goods production growth outpaced nondurable goods activity by 0.9% to 0.4%, respectively. In all, 12 of the 19 major sectors experienced output gains for the month, with most of the decliners among nondurable goods segments. The largest increases in production were in the plastics and rubber products (up 1.8%), wood products (up 1.7%), motor vehicles and parts (up 1.5%), petroleum and coal products (up 1.3%), electrical equipment and appliances (up 1.1%), and machinery (up 1.1%) sectors.”

Among non-energy consumer nondurables, there were declines in production of foods and tobacco, clothing and paper products. Those declines were partially offset by a gain in chemical products.

Business equipment saw a healthy 0.8% gain in production in May, its fourth monthly increase in a row. The largest gain was recorded by industrial and other equipment. Over the past year, the index for business equipment has advanced 5.3%.

The production of defense and space equipment moved down 0.3% last month after having been unchanged in April. However, output in May was still 2.6% above its level of a year earlier.

NAM’s Moutray also noted that manufacturing capacity was also showing steady, if slow, improvement.

“Capacity utilization for manufacturers also increased for the month, up from 76.7% in April to 77.0% in May. That was the highest level since March 2008, continuing a trend of reaching near pre-recessionary paces nearly five years after the economic recovery began. Still, on a year-over-year basis, manufacturing capacity has grown just 1.4%, which leaves room for improvement."

The Federal Reserve report “is a very positive confirmation that the manufacturing sector will continue to grow faster than the general economy this year and next,” said Daniel J. Meckstroth, chief economist for the Manufacturers Alliance for Productivity and Innovation (MAPI), adding:

“Growth is driven by a ramping up of the housing supply chain, a rebuilding of transportation equipment infrastructure, strong growth in oil and gas infrastructure, and pent-up demand for factory machinery. Capital spending for business equipment and machinery and big-ticket spending by consumers, both of which drive manufacturing activity, are demonstrating that economic growth is on a solid footing.”

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An award-winning editor, Executive Editor Steve Minter covers leadership, global economic and trade issues and energy, tackling subject matter ranging from CEO profiles and leadership theories to economic trends and energy policy. As well, he supervises content development for editorial products including the magazine,, research and information products, and conferences.

Before joining the IW staff, Steve was publisher and editorial director of Penton Media’s EHS Today, where he was instrumental in the development of the Champions of Safety and America’s Safest Companies recognition programs.

Steve received his B.A. in English from Oberlin College. He is married and has two adult children.

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