Industrial production in the U.S. was unchanged in May as a drop in utility use offset gains in manufacturing and mining.
Last month’s output at factories, mines and utilities followed a revised 0.4% decrease in April that was smaller than previously reported, a Federal Reserve report showed today in Washington. The median forecast in a Bloomberg survey called for a 0.2% advance. Manufacturing, which makes up 75% of total production, increased 0.1% after falling 0.4%.
Business investment has eased as the economy navigates the effects of this year’s across-the-board U.S. government budget cuts and higher taxes. At the same time, the auto industry remains a bright spot for manufacturing, which has been hindered by a recession in Europe and a slowdown in China.
“U.S. CEOs remain cautious because of uncertainties regarding fiscal issues,” said Christophe Barraud, an economist at Market Securities-Kyte Group in Paris, who correctly forecast May industrial production. “Global demand is still weak. Industrial production should accelerate at the end of the third quarter, beginning of the fourth quarter, because the impact of the sequester will be limited.”
Stocks were little changed after the Standard & Poor’s 500 Index posted its second-biggest gain this year. The S&P 500 fell less than 0.1% to 1,635.85 at 9:57 a.m. in New York.
Estimates of the 85 economists surveyed by Bloomberg ranged from a drop of 0.4% to an increase of 0.7%. The prior month was previously reported as a 0.5% decrease. Manufacturing accounts for about 12% of the economy.
Output at utilities declined 1.8% after a 3.2% slump the previous month. Consumers have adjusted their thermostats after temperatures turned more seasonable following colder-than-normal readings in the first quarter.
“We’ve gone from a seasonally cool winter to what seems to be an unseasonably cold spring,” said John Ryding, chief economist at RDQ Economics in New York. “You don’t need to heat but you don’t need to power up your air conditioners either.”
Manufacturing increased in May for the first time in three months, helped by a gain in auto production. The output of motor vehicles and parts increased 0.7% after a 0.4% decrease a month earlier, today’s report showed. Manufacturing excluding cars and parts rose 0.1% after a decrease of 0.4%.