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US May Industrial Production Rises Less Than Expected, April Revised Higher

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US industrial production rose by 0.1% in May, compared with expectations for a larger 0.3% increase in a survey compiled by Bloomberg, and following an upwardly revised 0.9% increase in April.

Manufacturing production remained flat while mining production increased by 1.3%.

Utilities production fell by 0.4% after a 2.2% increase in April.

Capacity utilization rose to 76.2% in May from a 76.1% rate in April, as expected.

The monthly industrial production report from the Federal Reserve measures production growth by manufacturers, utility producers and mining operations. The manufacturing data is broken down between products for use in the longer-term (durable) and shorter-term (non-durable), with vehicle production a key component. Also included is capacity utilization, which shows how much spare capacity producers have available.

A stronger-than-expected reading on industrial production is usually bullish for the stock market but may be bearish for the manufacturing, mining or utilities sectors depending on how that portion of the data performed in each month.

Overall, bonds prefer slower industrial production growth as a signal of more modest inflation but in times of tight supply, such as during the pandemic, it is possible to have both sluggish output and rising inflation.

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