Highlights of Industrial Production (May)

• Factory output fell 0.7 percent (est. unchanged) after rising an upwardly revised 0.6-percent gain.

• Total industrial production, which also includes mines and utilities, decreased 0.1 percent (est. 0.2-percent rise) after an upwardly revised 0.9-percent gain.

• Capacity utilization, measuring the amount of a plant that is in use, dipped down to 77.9 percent (est. 78.1 percent) from 78.1 percent.

Key Takeaways

The pullback in factory output largely reflects a disruption in truck assemblies due to a major fire at a parts supplier, the Fed said in the report. Excluding motor vehicles and parts, manufacturing production fell just 0.2 percent following a 0.8-percent gain the prior month.

The Fed's monthly data are volatile and often get revised. Manufacturing, which makes up 75 percent of total industrial production, accounts for about 12 percent of the U.S. economy.

Other recent reports have indicated factories are on steadier ground. U.S. manufacturing expanded at a faster pace in May, with order backlogs rising by the most in 14 years, while prices for materials continued to pick up, according to a survey released earlier this month by the Institute for Supply Management.

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