WASHINGTON, June 17 (Reuters) - U.S. factory production barely rose in May as a surge in motor vehicle and aircraft output was partially offset by weakness elsewhere, and the outlook for manufacturing remains clouded by tariffs.
Manufacturing output edged up 0.1% last month after a downwardly revised 0.5% decline in April, the Federal Reserve said on Tuesday. Economists polled by Reuters had forecast production rebounding 0.2% after a previously reported 0.4% drop. Production at factories increased 0.5% on a year-over-year basis in May.
President Donald Trump's shifting tariffs policy poses a significant headwind to manufacturing, which accounts for 10.2% of the economy and relies heavily on imported raw materials.
Trump recently doubled steel and aluminum duties to 50% from 25%. The array of tariffs includes a 25% tax on motor vehicles and parts.
Trump has defended the duties as necessary to revive a long-declining U.S. industrial base, but economists say that cannot be accomplished in a short period of time, citing high production and labor costs as among the challenges.
Motor vehicle and parts output accelerated 4.9% last month after declining 2.3% in April. Production of aerospace and miscellaneous transportation equipment increased 1.1%. But output of fabricated metal products, machinery and nonmetallic mineral products all posted declines of at least 1.0%.
Durable manufacturing production rose 0.4%. Nondurable manufacturing production dropped 0.2%, pulled down by decreases in the output of printing and support, petroleum and coal as well as food, beverage and tobacco products.
Nondurable consumer goods production fell 0.8% amid a 3.2% plunge in energy nondurable consumer goods.
Mining output ticked up 0.1% after falling 0.3% in the prior month. Utilities production fell 2.9%, with a 3.6% decline in electric utilities output more than offsetting a 2.7% increase in natural gas utilities output. That followed a 4.9% surge in April.
Overall industrial production fell 0.2% after gaining 0.1% in April. It rose 0.6% on a year-over-year basis in May.
Capacity utilization for the industrial sector, a measure of how fully firms are using their resources, fell to 77.4% from 77.7% in April. It is 2.2 percentage points below its 1972–2024 average. The operating rate for the manufacturing sector was unchanged at 76.7%. It is 1.5 percentage points below its long-run average.
Reporting by Lucia Mutikani; Editing by Andrea Ricci
Source: Reuters