U.S. industrial production increases less than anticipated in May

The Federal Reserve reported on Tuesday the U.S. industrial production rose 1.4 m-o-m in May, following a revised 12.5 percent m-o-m decline in April (originally an 11.2 percent m-o-m drop), which was the largest drop in the 101-year history of the index.

Economists had forecast industrial production would increase 2.9 percent m-o-m in May.

According to the report, many factories resumed at least partial operations following suspensions related to COVID-19 in May. Manufacturing output, which fell sharply in March and April, rose 3.8 percent m-o-m, as most major industries posted advances, with the largest gain registered by motor vehicles and parts. Meanwhile, the indexes for mining and utilities declined 6.8 percent m-o-m and 2.3 percent m-o-m, respectively.

Capacity utilization for the industrial sector increased 0.8 percentage point m-o-m to 64.8 percent in May. That was 2.1 percentage points below economists’ forecast and 15.0 percentage points below its long-run (1972-2019) average.

In y-o-y terms, the industrial output fell 15.3 percent in May, following a revised 16.2 percent decrease in the prior month (originally a 15.0 percent drop).