Economic Report: U.S. industrial output rebounds in May led by autos

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The numbers: Industrial production rebounded 0.8% in May due to a strong gain in auto production, the Federal Reserve reported Tuesday.

The gain was above Wall Street expectations of a 0.5% gain, according to a survey by the Wall Street Journal. Output in April was revised down to a 0.1% gain from the prior estimate of 0.5%.

Production of motor vehicles and parts jumped 6.7% in May after a 5.7% drop in the prior month.

Capacity utilization rose to 75.2% in May, the highest rate since the pandemic struck last year. The capacity utilization rate reflects the limits to operating the nation’s factories, mines and utilities.

Big picture: The rebound in autos suggests that the shortage of semiconductors in the sector is less acute. But economists think that other shortages will hold back production this year.

What happened: Production at factories increased 0.9% in May, up from a revised 0.1% drop in the prior month. Excluding autos, manufacturing rose 0.5%.

Overall vehicle assemblies jumped about 1 million units to 9.9 million units on an annual rate, but they remained more than 1 million units below their average level in the second half of 2020.

Utilities output rose 0.2% in May after a 1.9% gain in the prior month. Mining output, which includes oil and natural gas, rose 1.2% after a 0.4% drop in April.

Market reaction: Stocks
DJIA,
-0.34%

SPX,
-0.17%

opened lower on Tuesday after another strong inflation report at the wholesale level.

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