A sharp decline in manufacturing especially of autos caused total US industrial output in May to dip for the first time since the start of the year, the Federal Reserve reported Friday. A fire at a plant producing truck parts was blamed for most of the drop in auto assembly but there were other signs of weakness in the report as well.
Even so, output in April was revised higher than originally reported, which bodes well for economic growth in the second quarter. Industrial production slipped 0.1 percent compared to April, due largely to a 0.7 percent drop in the manufacturing sector - the biggest decline in more than four years, the report showed. Motor vehicles and parts production fell 6.5 percent, which was attributed mostly to the fire that disrupted truck assemblies but it was the second straight month of falling output in the sector.
Other categories like consumer goods and business equipment also fell, indicating the weakness was not confined to autos. Still, total output remains 3.5 percent higher than May 2017, the report said. The mining sector posted another solid increase of 1.8 percent, as oil and gas output continues to post gains, putting it 12 percent higher than the prior year.
Utilities output rose 1.1 percent in the month. Industrial capacity in use declined two tenths to 77.9 percent, and remains nearly two points below the long-run average, the Fed said. Capacity utilization in the manufacturing sector fell to 75.3 percent from 75.9 percent.
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