U.S. Industrial Production – May 2018

Released Friday, June 15, 2018

downloadsIndustrial Production: -0.1% month-over-month (Cons: +0.2%); +3.5% year-over-year
Manufacturing Production: -0.7% month-over-month (Cons: +0.0%); +1.7% year-over-year
Capacity Utilization: 77.9% (Cons: 78.1%); (78.1% prior month)

Quick Take:
Headline industrial production decreased 0.1% month-over-month in May, which was below economists’ estimates of a 0.2% increase. Mining production rose 1.8% month-over-month and utilities production rose 1.1%. Manufacturing production fell 0.7% in May as motor vehicles and parts production was disrupted by a fire at a major parts supplier. Excluding the impact of this event, manufacturing production declined 0.2%.

Year-over-year growth in headline industrial production was 3.5% in May, down from 3.6% growth in April. Mining production grew 12.6% year-over-year, up from 11.2% growth in the prior month. Utilities production was up 4.0% on a year-over-year basis, lower than April’s 5.4% pace of growth.  Mining production accounts for ~15% of total industrial production volume but drove over half of year-over-year headline growth in May.

While year-over-year headline industrial production growth remains above its average of 2.0% since 2010, the recent acceleration in growth has been driven by the mining industry, which reached its highest pace of year-over-year growth since 2012 in May. Manufacturing production, which is more impactful from an economic growth perspective, has declined in three of the first five months of 2018. While activity was held down by disruptions to the motor vehicle and parts supply chain, manufacturing production still moved lower on a month-over-month basis when excluding motor vehicles and parts. On a six-month annualized basis, manufacturing production was only up 1.3% as of May.

Notable Data:
In May, durable manufacturing decreased 1.2% month-over-month as motor vehicles and parts production fell 6.5% month-over-month. In April, motor vehicles and parts production declined 2.2%. Non-durable manufacturing decreased 0.1% month-over-month in May due to declines in food, beverage, and tobacco production (-0.2% month-over-month) and petroleum and coal products production (-1.1% month-over-month).

Capacity utilization for headline industrial production fell to 77.9% in May from 78.1% in April, while capacity utilization for manufacturing declined to 75.3% from 75.9%.