U.S. factory output rose in May amid trade war uncertainty

UNITED STATES manufacturing output rose 0.2% in May after falling 0.5% in the prior month. / BLOOMBERG NEWS FILE PHOTO/TY WRIGHT
UNITED STATES manufacturing output rose 0.2% in May after falling 0.5% in the prior month. / BLOOMBERG NEWS FILE PHOTO/TY WRIGHT

WASHINGTON – United States factory production expanded in May for the first time since December on gains across sectors that signal the manufacturing sector is holding up amid trade uncertainty.

Manufacturing output rose 0.2% after falling 0.5% in the prior month, according to Federal Reserve data Friday that matched the estimate in Bloomberg’s survey of economists. Total industrial production, which also includes mines and utilities, increased 0.4% after an upwardly revised 0.4% decrease.

The report follows data from China Friday showing industrial output growth in the world’s second largest economy slowed to the weakest pace since 2002, reflecting headwinds from the U.S. trade war.

U.S. equities edged lower Friday. The S&P 500 Index decreased 0.2% as of 9:32 a.m. New York time.

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Key insights

  • The Fed report shows manufacturing holding up as a historically robust labor market helps offset trade policy uncertainty. Still, cooling momentum in the sector in recent years may be poised for further strain amid President Donald Trump’s continued tensions with major trading partners
  • The data add to signs of resilience in the sector, including recent improvement in regional Fed factory gauges from the Philadelphia and New York districts. A separate report Friday showed U.S. retail sales posted a broad-based gain in May and the prior two months were revised higher
  • Production of consumer durable goods saw a 2% gain that was driven primarily by a 3.4% advance for automotive products

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  • Capacity utilization, measuring the amount of a plant that is in use, increased to 78.1% from 77.9%
  • Utility output advanced 2.1% after falling 3.1% the prior month. Mining production rose 0.1% after a 2.2% rise
  • Machinery production climbed 1.1% and business-equipment production rose 0.2%.
  • The Fed’s monthly data are volatile and often get revised. Manufacturing, which makes up about 75% of total industrial production, accounts for about 12% of the U.S. economy

Christopher Condon is a reporter for Bloomberg News.