Industrial production in the United States hit a record in May, but signs of a coming economic slowdown emerged in the report released on Friday by the Federal Reserve.
Production volume overall increased by 0.2% on the month for the fifth straight monthly gain. At the same time, manufacturing production, a narrower but still significant gauge of activity, fell by 0.1%. Manufacturing products account for 75.9% of total industrial production.
As demand slows and interest rates rise, we expect production activities to slow or even decline in the coming months, in line with our RSM US Manufacturing Outlook Index.
Output for motor vehicles rose by 0.7%, not enough to offset the drop in non-vehicle components, which declined by 0.1%.
Utilities and mining posted solid growth in May as demand for summer travel increased. Utilities were up by 1.0% while mining was up by 1.3%.
Rising oil and gasoline prices incentivize producers to ramp up production. Mining activities for drilling oil and gas wells rose by a sharp 6.2% on the month.
On aggregate, production of energy-related products rose by 1.4% in May, following another sharp rise of 2.8% in April as a result of continuing sanctions on Russian energy exports.
Capacity utilization—which feeds into our RSM US Supply Chain Index—rose slightly to 79% from 78.9%, driven by higher utility and mining capacities.
