US Industrial Production Falls 0.2% in May Amid Capacity Utilization Drop

U.S. industrial production declined by 0.2% in May, marking the second drop in the last three months and a larger-than-expected decrease compared to forecasts that predicted no change or a slight increase. Manufacturing output showed a modest increase of 0.1%, led by motor vehicles and parts, while utilities production fell sharply by 2.9%, and mining rose slightly by 0.1%. Industrial capacity utilization also decreased to 77.4% from 77.7% in April, continuing a three-month downward trend. The decline suggests a weakening in key sectors such as manufacturing, mining, and utilities, raising concerns about the broader economic momentum and its potential impact on the U.S. dollar and monetary policy decisions. This unexpected downturn challenges previous signs of stability and could influence Federal Reserve policy under President Trump’s administration as the economy navigates post-pandemic conditions. The mixed data highlights ongoing uncertainties in the hard economic indicators despite some soft data improvements.