Manufacturing Output Increases 3.8% in May - Modern Distribution Management

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Manufacturing Output Increases 3.8% in May

According to the Industrial Production and Capacity Utilization Report, total industrial production grew 1.4% during the month.

Total industrial production increased 1.4% in May, as many factories resumed at least partial operations following suspensions related to COVID-19. Even so, total industrial production in May was 15.4% below its pre-pandemic level in February. Manufacturing output — which fell sharply in March and April — rose 3.8% in May; most major industries posted increases, with the largest gain registered by motor vehicles and parts.

The indexes for mining and utilities declined 6.8% and 2.3%, respectively. At 92.6% of its 2012 average, the level of total industrial production was 15.3% lower in May than it was a year earlier. Capacity utilization for the industrial sector increased 0.8%age point to 64.8% in May, a rate that is 15% below its long-run (1972–2019) average and 1.9% below its trough during the Great Recession.

The major market groups posted broad-based gains in their production indexes in May, but each remained well below its pre-pandemic level. The index for consumer goods rose 3.9%, led by a significant rebound for automotive products. The production of business equipment rose 5.8% and was boosted by a substantial increase in transit equipment as most factories producing motor vehicles and civilian aircraft reopened. The indexes for defense and space equipment, construction supplies, and business supplies also recorded gains. The output of materials decreased 0.8%, as the production of energy materials was held down by declines related to oil extraction that more than offset increases in the indexes for durable and nondurable materials.

Manufacturing output rose 3.8% in May, but it was still 16.9% below its pre-pandemic level in February. The index for durable manufacturing increased 5.8% in May; the most sizable gain among its components was for motor vehicles and parts, where output rose substantially but also remained more than 60% below its February level.

Durable goods industries that recorded production increases between 8% and 10% include nonmetallic mineral products, aerospace and miscellaneous transportation equipment, and furniture and related products. The index for nondurables rose 2.1%, with advances of around 10% or more for textile and product mills, for apparel and leather, for printing and support, and for plastics and rubber products. The output of other manufacturing (publishing and logging) moved up 2.5%.

The output of utilities fell 2.3% in May, as both gas and electric utilities posted losses. Mining output dropped 6.8%, with declines in nearly all categories. After falling nearly 28% in April, the index for oil and gas well drilling declined almost 37% further in May and was more than 63% below its year-earlier level. In addition, the index for crude oil extraction has fallen about 5% in each of the past two months.

Capacity utilization for manufacturing in May was 62.2%, 2.2% higher than in April but 1.5% below its recession trough of June 2009. The operating rate for durable manufacturing increased 3.1% in May to 57.1% but remained below its 2009 low. Capacity utilization for nondurables rose 1.4% points to 68.5%, slightly below its 2009 low.

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