Industrial production in May was unchanged m/o/m, two tenths less than expected. Most noteworthy however was the .4% drop in manufacturing, well worse than the estimate of up .1% because of a 2% drop in the production of vehicles/parts. This are is still up 4.5% y/o/y which points to the likelihood of more auto production weakness ahead. GM said as much yesterday when they said “they will extend the typical summer shutdown at certain US factories to deal with slumping sales and bloated inventory” according to the WSJ. Production of computer/electronics also fell m/o/m while machinery production was basically flat. Mining production was a bright spot as seen with higher rig counts and its up 8.3% y/o/y. Utility output was higher but which gets bullied around by weather.
Bottom line, for the best perspective of the state of manufacturing production in the US, look at this chart of the index. We are still below the 2007 peak and now are about to roll over driven by a decline in the auto sector:
Capacity utilization at 76.6% is still well below the long term average of about 80% as we sit here in the 9th yr of this expansion. Capacity utilization in the auto sector in particular fell to 81.6% from 83.4% and that certainly has room to move lower. See chart on that: