US industrial production declined 0.2% m/m in May, coming in weaker than expected (consensus: 0.2%) as April data were also revised lower (-0.5%, initial: -0.3%). The unexpected weakness in May came from the manufacturing sector, where output fell 0.2% on the month (previous: 0.1%, initial: 0.0%).
According to Barclays, this morning's data on factory output for May suggest overall industrial activity remains subdued. The mining sector continues to pull back from the decline in oil prices, while the lagged effects of a stronger dollar present continued headwinds for many areas of the domestic manufacturing sector.
The 7.9% m/m contraction in oil and gas drilling IP was more moderate than expected in May. The remaining portions of the industrial production report that impact our GDP tracking estimate were broadly in line with our expectations. On net, our Q2 GDP tracking estimate rose one-tenth to 3.3% on a smaller drag from nonresidential structures investment, adds Barclays
