Posted June 16, 2010
Industrial production rises
Industrial production advanced 1.2 percent in May after having risen 0.7 percent in April.
Manufacturing output climbed 0.9 percent last month, its third consecutive monthly gain of about 1 percent, and was 7.9 percent above its year-earlier level.
Capacity utilization for manufacturing moved up 0.7 percentage point to 71.5 percent, a rate 6.4 percentage points above its trough in June 2009, but 7.7 percentage points below its average from 1972 to 2009.
The production index for durable goods advanced 1.7 percent in May; most major categories of durables strengthened. Sizable gains were recorded for wood products, primary metals, fabricated metal products, machinery, motor vehicles and parts, and furniture and related products.
"The May industrial production report confirms earlier indicators from the purchasing managers' index and the Bureau of Labor Statistics' jobs report on manufacturing employment; all three indicators point to strong growth in physical output last month," said Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI. "Fifteen of the 20 major manufacturing industries experienced growth last month. Furthermore, many of the industries that posted the strongest gains were some of those severely hurt by the recession that ended in June 2009, for example, steel, motor vehicles, wood products, and machinery industries.
"While an inventory swing from destocking to restocking is certainly a key driver in the industrial rebound, the breadth of the rebound is impressive and creates self-reinforcing demand for materials and equipment across the whole manufacturing sector," he added. "Manufacturing unit labor costs are declining, thanks to rapid productivity gains in the manufacturing sector, which bodes well for industrial competitiveness in the export market. We expect sustained growth this year and next but the pace of growth should decelerate."
