U.S. industrial production saw a major jump during May following two straight flat months, matching a 10-month high set in July of last year.

The Federal Reserve’s latest Industrial Production and Capacity Utilization Report showed that production increased 0.9% in May month-to-month, far surpassing expectations of a 0.4% gain from economists surveyed by the Wall Street Journal.

U.S. Industrial Production Index – Month-to-Month

source: tradingeconomics.com 

At 103.3% of its 2017 average, total industrial production in May was up 0.4% year-over-year. Capacity utilization moved up 0.5% from April to 78.7%, which was up 1.4% year-over-year.

April’s total index of 102.8% of its 2017 average was dragged down by a 0.3% month-to-month decline in manufacturing and a 0.6% drop in the index for mining, while utilities jumped 2.8%.

Year-over-year, total industrial production fell 0.4%, likewise hampered by a 0.5% slide in manufacturing and 1.3% drop in mining, while utilities jumped 2.3%.

Total U.S. capacity utilization dipped 0.1% in April month-to-month to 78.4% of its long-run (1972-2023) average, but improved 1.4% year-over-year. Capacity utilization for manufacturing moved down 0.3 percentage points in April to 76.9%, a rate that was 1.3 points below its long-run average. 

Market Groups

May’s monthly gains were widespread across major market groups:

• The index for consumer goods rose 1.3%, with increases in all of its components except for home electronics
• Business equipment posted a small 0.2% gain as a decrease in its transit component was outweighed by gains in the information processing component and in the industrial and other component
• The index for defense and space equipment rose 1.0% and was nearly 10% above its year-earlier level
• The materials index increased 0.8%, as subindexes for non-energy durables and non-energy nondurables each increased about 1%, while energy materials rose 0.6%

Industry Groups

May’s manufacturing output increased 0.9% month-to-month and was up 0.1% year-over-year. The index for durable manufacturing rose 0.6% month-to-month, while the index for nondurable manufacturing jumped 1.1% and the index for other manufacturing (publishing and logging) moved up 0.2%.

Most industry groups within durable manufacturing posted monthly gains in May. They were led by the indexes for wood products (+2.6%), machinery (+2.3%) and computer and electronic products (+0.8%).

Mining output increased 0.3% in May month-to-month after declining in April and March and was down -0.4% year-over-year. The output of utilities increased 1.6% during May and was up 3.9% year-over-year.