Industrial Production Mixed

Industrial production proved mixed in May, up a stronger-than-expected 0.4 percent at the headline level but up only a modest and as-expected 0.2 percent for manufacturing. The overall capacity utilization rate was a bit stronger than expectations, up 2 tenths to 78.1 percent.

Utilities output made the difference for May, up 2.1 percent following a 3.1 percent swing lower in April. Mining production was up 0.1 percent in May and, like manufacturing, pulled down the headline.

The lack of punch for manufacturing came despite a strong 2.4 percent rise in vehicle output that, however, followed prior sharp declines. The selected hi-tech subcomponent was also strong, at 0.4 percent in the month. Business equipment and construction supplies both posted modest 0.2 percent May gains.

Though mixed, this report should be taken at its headline face value, that is a 0.4 percent overall rise is respectable enough, and though manufacturing was soft the gains for vehicles and hi-tech are positive. The manufacturing sector has been struggling this year though the improvement in May in this report is a favorable outcome.