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