U.S. factory output posts first monthly growth of 2019

By Jason Lange
FILE PHOTO: Robotic arms bring together car frames for welding at Nissan Motor Co's automobile manufacturing plant in Smyrna Tennessee

By Jason Lange

WASHINGTON, June 14 (Reuters) - U.S. manufacturing output rose in May, the first monthly gain this year, as an increase in the production of motor vehicles and parts countered declines in the making of metals and aerospace equipment.

The Federal Reserve said on Friday manufacturing production rose 0.2% last month, which was slightly higher than analysts in a Reuters poll had expected but only a partial recovery from the prior month's sharp decline.

The data could give some respite to concerns that the U.S. factory sector is sagging under the weight of a slowing global economy. U.S. manufacturing output had contracted in January, February and April.

Economists worry a trade war between the United States and China is contributing to the global slowdown. Earlier on Friday, a report showed Chinese industrial output growth unexpectedly slowed to more than a 17-year low.

In May, U.S. motor vehicles and parts production rose 2.4 percent. Excluding motor vehicles and parts, manufacturing output was flat.

Primary metal production fell 1.9% last month, while output of fabricated metal products dipped 0.1%.

The outlook for the U.S. manufacturing sector, which accounts for about 12% of the economy, is also suffering as stimulus from last year's $1.5 trillion tax cut package diminishes.

Overall industrial output, which includes utilities and mining production, rose 0.4% in May. Utilities output rose 2.1% and mining production crept up 0.1%.

Capacity utilization for the manufacturing sector, a measure of how fully firms are using their resources, edged higher to 75.7 percent last month from 75.6 percent in April.

Overall capacity utilization rose to 78.1 percent last month, which was 1.7 percentage point below its 1972-2018 average. Officials at the Fed tend to look at capacity use measures for signals of how much "slack" remains in the economy — how far growth has room to run before it becomes inflationary.

(Reporting by Jason Lange Editing by Paul Simao)