U.S. industrial production likely to have eased in May

The U.S. industrial production is likely to have eased in May. In the prior month, industrial production had risen 0.7 percent to a fresh all-time high. All three major categories had positively contributed to the rise. Manufacturing production had grown 0.5 percent, mining extraction had grown 1.1 percent and utilities had grown 1.9 percent sequentially.

The strong growth in April represented a good start to the second quarter growth following a weak growth recorded in the first quarter. Still, the firming trend in U.S. industrial production output is clear now that the energy-driven sectors of the economy are back in expansion territory.

Capacity utilization had risen 0.4 percentage points to 78 percent in the prior month, consistent with its 2013 level and 1.6 points below the cycle high recorded in November 2014. The absorption of excess slack in production augurs well for the equipment investment line of GDP going forward as businesses work to meet rising demand for products. Tightening in the supply chain and labor market should incentivize continued spending on more equipment going forward, stated Wells Fargo in a research report. Industrial production is likely to have eased to 0.2 percent in May, stated Wells Fargo.

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