US economy

US industrial output rises in May as manufacturing rebounds


US industrial output increased in May as the manufacturing sector bounced back on renewed strength in autos and appliances.

The Federal Reserve said Friday industrial production rose 0.4 per cent last month, compared with an upwardly revised 0.4 per cent drop in April (it was previously a 0.5 per cent decline) and surpassing economists’ expectations for a 0.2 per cent gain.

The gains reflected a reversal of fortune for domestic manufacturing with output climbing a better than expected 0.2 per cent, led by durable goods such as motor vehicles and parts, following a decline of 0.4 per cent in the previous month. Vehicle assembly hit a rate of 11.33m units annually, up from 10.65m and the highest reading so far for the year.

Indices tracking utilities and mining also improved, showing gains of 2.1 per cent and 0.1 per cent, respectively.

The production of consumer goods, business equipment and construction supplies picked up as well after a slower month of April. Gains in business equipment came despite a decline in the output of commercial aircraft — possibly the fallout from cuts to Boeing 737 Max production.

Capacity utilisation across the industrial sector ticked 0.2 percentage points higher to 78.1 per cent. Officials at the central bank monitor industrial capacity as a gauge of how much room the economy has to grow.

The report may assuage fears of a slowdown in the US economy at a time when investors have bet that the Fed will lower interest rates this year. Industrial production had recorded declines in three of the first four months of the year, while hiring slowed in May following a blockbuster April.

In other data published on Friday, the commerce department said retail sales climbed for a second straight month in May.

Treasuries extended their sell-off following the release of industrial production figures, sending yields higher. The 10-year Treasury yield added 1.7 basis points to 2.1081 per cent.

The greenback also gained, with the dollar index advancing 0.3 per cent to 97.325.



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