With manufacturing and utilities output pulling back, the Federal Reserve released a report on Wednesday showing a much bigger than expected drop in U.S. industrial production in the month of May.
The Fed said industrial production fell by 0.4 percent in May after climbing by a downwardly revised 0.6 percent in April.
Production had been expected to edge down by 0.1 percent compared to the 0.7 percent increase originally reported for the previous month.
The pullback in production came as manufacturing output dropped by 0.4 percent in May following a 0.2 percent uptick in April.
The Fed said the decrease in manufacturing output was led by a steep drop in the production of motor vehicles and parts. Excluding motor vehicles, factory output edged down by just 0.1 percent.
The report also showed a downturn in utilities output, which slumped by 1.0 percent in May after surging up by 6.1 percent in the previous month.
On the other hand, mining output edged up by 0.2 percent in May after tumbling by 2.6 percent in April. The modest increase came on the heels of eight straight monthly declines.
The Fed also said capacity utilization for the industrial sector fell to 74.9 percent in May from a revised 75.3 percent in April.
Economists had expected capacity utilization to dip to 75.2 percent from the 75.4 percent originally reported for the previous month.
Capacity utilization in the utilities sector fell to 77.5 percent and capacity utilization in the manufacturing sector edged down to 74.8 percent, while capacity utilization in the mining sector inched up to 73.1 percent.
by RTT Staff Writer
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