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Economy in Brief

U.S. Industrial Production Declines Unexpectedly
by Tom Moeller  June 15, 2016

Industrial output fell 0.4% during May (-1.4% y/y) following a 0.6% rise, revised from 0.7%. It was the third decline this year and left output 0.2% below December. No change in output had been expected in the Action Economics Forecast Survey.

Factory sector production declined 0.4% last month (-0.1% y/y) following a 0.2% rise, revised from 0.3%. Consumer goods production fell 0.7% (+0.3% y/y) as motor vehicle output & parts output declined 4.2% (-1.4% y/y) after a 1.6% rise. Machinery output fell 1.1% (-4.2% y/y) and furniture production was off 0.8% (+1.0% y/y), the fourth consecutive monthly drop. These declines were offset by a 0.6% rise (3.8% y/y) in computer & electronic component production and a 0.6% increase (-0.7% y/y) in primary metals output.

In the nondurable goods sector, chemical output rose 0.4% (1.1% y/y) while paper product production also improved 0.4% (-3.4% y/y). Offsetting these gains, apparel output declined 0.9% (-9.4% y/y) and petroleum & coal production fell 0.7% (+0.8% y/y).

A 1.0% decline in utility output (-0.8% y/y) added to last month's weakness in total production. Electric power generation fell 1.6% (-1.0% y/y), but natural gas production rose 4.7% (0.4% y/y). Mining sector production gained 0.2% (-11.6% y/y), the first increase in nine months.

In the subcategory groupings, output of high technology products improved 0.5% (2.4% y/y) as computer & office equipment production jumped 2.4% (0.2% y/y). Communications equipment eased 0.3% (+9.9% y/y). Overall factory sector production excluding the high-tech & motor vehicle sectors eased 0.1% (-0.2% y/y), down for the third month this year.

Capacity utilization declined to 74.9% from 75.3%, revised from 75.4%. That remained lower than 78.9% in November 2014. Factory sector utilization fell to 74.8%, and was down from the 2014 high of 76.3%. Industry capacity rose 0.8% y/y while factory sector capacity also improved 0.8% y/y.

Industrial production and capacity data are included in Haver's USECON database, with additional detail in the IP database. The expectations figure is in the AS1REPNA database.

Industrial Production (SA, % Change) May Apr Mar May Y/Y 2015 2014 2013
Total Output -0.4 0.6 -1.0 -1.4 0.3 2.9 1.9
Manufacturing -0.4 0.2 -0.4 -0.1 0.8 1.3 0.9
    Consumer Goods -0.7 1.1 -1.2 0.3 1.4 0.7 0.7
    Business Equipment -0.7 1.2 -0.5 -1.4 0.7 2.4 -0.2
    Construction Supplies -0.3 0.2 -0.8 1.2 1.5 3.7 3.0
  Materials -0.2 0.2 -0.9 -2.7 0.5 4.7 3.3
Utilities -1.0 6.1 -3.9 -0.8 -0.7 1.3 2.3
Mining 0.2 -2.6 -2.4 -11.5 -1.8 11.0 6.5
Capacity Utilization (%) 74.9 75.3 74.8 76.6 76.7 78.2 76.9
 Manufacturing 74.8 75.2 75.1 75.5 75.5 75.4 74.5
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