The U.S. Commerce Department’s weak report on industrial production in May reflects reduced output of motor vehicles and parts—a segment that had been gaining steam over the past several months. Part of the problem, analysts say, lies in supply chain disruptions following the earthquake in Japan and the subsequent impact on automotive manufacturers and assembly plants here in the United States and abroad.
Excluding motor vehicles and parts, manufacturing output in the U.S. advanced 0.6 percent in May.
Following are some stand-outs from the May report:
The production of consumer goods edged down 0.1 percent in May after having been unchanged in April. Within consumer goods, the index for durables rose 0.2 percent, while the index for nondurables declined 0.2 percent. Among durable goods categories, the output of automotive products fell 0.5 percent.
The indices for other major components actually increased during the month of May. Specifically: the output of home electronics advanced 1.7 percent; the output of appliances, furniture, and carpeting rose 1.8 percent; and the index for miscellaneous consumer durables increased 0.7 percent. The decrease in consumer nondurables reflected a drop in residential sales by utilities; elsewhere, the output of fuels advanced and the production of non-energy nondurable goods edged up.
The output of business equipment rose 1.2 percent in May after two months of declines. Sizable gains were recorded both in May and over the past year for all of the major components of business equipment: transit equipment, information processing equipment, and industrial and other equipment. The increase for industrial and other equipment in May was the first substantial gain in this index since January.
The production index for defense and space equipment rose 0.9 percent in May after holding steady in each of the previous two months. This index stands 2.5 percent above its year-earlier level.
The output of materials to be processed further in the industrial sector edged down 0.1 percent for a second consecutive month in May. The output of durable materials rose 0.4 percent in May, while the output of nondurable materials moved up 0.4 percent after having fallen 0.9 percent in April. The increase in nondurable materials in May was due to a sizable increase for textile materials and a gain for chemical materials.
Capacity utilization for manufacturing moved up 0.3 percentage point to 74.5 percent, a rate more than 10 percentage points above its trough in June 2009 but still 4.5 percentage points below its average from 1972 to 2010.
The production index for durable goods moved up 0.6 percent in May after having fallen 0.8 percent in April. Durable goods industries with gains in output included nonmetallic mineral products, fabricated metal products, machinery, computer and electronic products, aerospace and miscellaneous transportation equipment, furniture and related products, and miscellaneous manufacturing. However, losses in output were recorded for the following industries: wood products; primary metals; electrical equipment, appliances, and components; and motor vehicles and parts.
Mining output rose 0.5 percent last month, with gains seen in oil and gas extraction—in support activity for mining—as well as in metal ore mining. Capacity utilization for mining moved up 0.3 percentage point to 88.6 percent, a rate 1.2 percentage points above its average for the period from 1972 to 2010.
The complete May 2011 U.S. Industrial Production report is available online.