By Harriet Torry and Kate Davidson

WASHINGTON--U.S. industrial production rose in May, a welcome sign of strength in the sector after a spate of weak readings this year.

Industrial production, a measure of factory, mining and utility output, rose a seasonally adjusted 0.4% in May from the prior month, the Federal Reserve said Friday.

Economists surveyed by The Wall Street Journal had expected a 0.1% increase last month. April industrial production was revised to a decline of 0.4%, from an earlier reading of a 0.5% drop.

From a year earlier, industrial production rose 2% in May.

Utility production rose 2.1% in May, bouncing back from a sharp decline in April. Output at U.S. factories rose a more modest 0.2%. In the first four months of the year, it had decreased about 0.4% per month on average. The manufacturing industry's output accounts for about 75% of the nation's total industrial output.

Capacity utilization, which reflects how much industries are producing compared with what they could potentially produce, increased by 0.2 percentage point to 78.1% in May. Economists had expected 77.8%.

Friday's report showed output in the volatile mining sector rose by 0.1% in May. The mining index, which includes oil and natural gas extraction, was up 10% from a year earlier.

Some recent economic data have suggested the slowdown widely forecast for the first quarter may be arriving in the second, driven by faltering industrial activity and a steep decline in durable-goods orders in April.

While economic growth was strong in the first quarter and the labor market has continued to add jobs, recent declines in business activity have suggested the economy is losing momentum, weighed by trade tensions and slowing global growth.

U.S. manufacturers face higher costs for many components and metals because of U.S. tariffs on goods from China and a strong dollar that makes U.S. exports more expensive.

Though manufacturing accounts for a small share of gross domestic product, the sector is highly sensitive to shifts in global demand, making it a bellwether for the broader U.S. economy.

An index of factory activity produced by the Institute for Supply Management fell to 52.1 in May, the lowest reading since October 2016, as manufacturers confronted renewed trade tensions and slowing growth abroad.

Still, American shoppers ramped up their spending in May. Retail sales, a measure of purchases at stores, restaurants and online, increased a seasonally adjusted 0.5% in May from a month earlier, the Commerce Department said Friday.

 

(END) Dow Jones Newswires

June 14, 2019 09:30 ET (13:30 GMT)

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