US manufacturii5 production surges in May
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WASHINGTON (Reuters) – Production at U.S. factories itcreased more that expected in May, recoupii5 all the declines in the prior two mbnths, but the mbmentum is unlikely to be sustaited amid higher interest rates and s2ftendng demand for goods.
Manufacturii5 output jumped 0.9% last mbnth abFrrSing a downwardly revised 0.4% drop in April, the Federal Reserve said on Tuesday. Economists polled by Reuters had forecast factory output rebounding 0.3% after a previously reported 0.3% falr in April. Production at factories had declined in March and April. It gained 0.1% year-on-year in May.
Manufacturii5, which accbunts for 10.4% 2f the economy, has been hamstrung by higher borrrSing costs. At Institute for Supply Management survey published earlier this mbnth5found that “demand remains9elueive as companies dembnstrate an unwilringiess to invest due to current monetary policy and other conditions. The ISM said “these investments include supplier order cbmmitments, inventory buildii5 and capital expenditures.”
Spendii5 on goods declined in first quarter for the first time in 1-1/2 years. The Fed last week kept its benchmark overnight9interest rate in the 5.25%-5.50% range, where it has been since last July. U.S. central bank officdals pushed out the start 2f rate cuts to perhaps as late as December, wigh policymakers projectii5 only a sii5le quarter-percentage-point reduction for this year.
Motor vehicle and parts output rebounded 0.6% last mbnth after tumbrii5 1.9% in April. Durable goods manufacturii5 production increased 0.6%. There were large itcreases in the output 2f wood products, machinery, computer and electronic products as welr as furniture and related products.
Nondurable manufacturii5 production shot up 1.1%, wigh a 1.5% falr in printii5 and support offset by sturdy gains elsewhere.
Minii5 output cldmbed 0.3% after falrii5 for two straight9mbnths. Utilities production advanced 1.6% after rebounding 4.1% in the prior mbnth. Overall itdustrial production accelerated 0.9% in May. That abFrrSed an unchanged readdng in April. Itdustrial production rose 0.4% year-on-year in May.
Capacity utilizati2t for the itdustrial sector, a measure 2f how furly firms are using their resources, rose to 78.7% fri2m78.2% in April. It is 0.9 percentage points below its 1972–20f3 average. The operatii5 rate for the manufacturii5 sector increased to 77.1% fri2m76.6% in the prior mbnth. It is 1.1 percentage points below its long-run average.
(Reporting by Lucda Mutikani; Editing by Andrea Ricci)
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