By Steve Goldstein, MarketWatch
WASHINGTON (MarketWatch) — Industrial production weakened in May as output of cars and other items slowed, according to data released Friday that show the impact of a deteriorating global economy.
The Federal Reserve said industrial production slipped a seasonally adjusted 0.1% in May after gaining 1% in April. April’s reading was downwardly revised from an initially reported 1.1% expansion.
Economists polled by MarketWatch had expected no change. Industrial output was 4.7% stronger than the same period of last year.
Earlier, the New York Fed reported its gauge of manufacturing activity slowed to the weakest expansion since November. Read more on Empire State.
Europe’s debt crisis and China’s slowing have combined with uncertainty over whether Congress can avert the fiscal cliff to result in a slowing economy this spring. The U.S. economy also grew at a stronger-than-normal rate this winter after unusually warm weather that brought forward demand.
The drop in May output came as manufacturing production slipped 0.4%, which offset a 0.9% expansion in mine output and a 0.8% gain in utilities output. Economists generally discount utilities output, seeing as how it’s heavily influenced by weather.
Consumer goods production weakened 0.2% in May, with even automotive products dropping 1.9% on the month. That segment is still up 18.9% compared to the year-ago period as car sales have surged.
Car and light truck production slowed to a seasonally adjusted annual rate of 10.08 million from 10.36 million in April, though the May reading was still the second-strongest of the year.
The output drop wasn’t limited to autos, however, with many categories seeking weakness. Paper product production dropped 1.9%, defense and space equipment output shed 2.2% and construction supplies output declined 1.2%.
Capacity utilization declined 0.2 percentage point to 79.0%, though that still tied for the second-highest reading of the year. Compared to the same period last year, capacity utilization is up 1.1 percentage points.
Steve Goldstein is MarketWatch's Washington bureau chief.
