US industrial production drops more than expected in May

US industrial production slipped more than expected in May, according to the latest data from the Federal Reserve.

Industrial output fell 0.4% after increasing a revised 0.6% in April, missing expectations of a 0.2% decline.

Manufacturing output was down 0.4%, led by a large drop in the production of autos and part, which fell 4.2%. Factory output aside from motor vehicles and parts edged down 0.1%. Meanwhile, utilities production was down 1% from April.

Overall industrial production declined 1.4% in the year to May.

Capacity utilisation, which measures industrial slack, fell 0.4 percentage point in May to 74.9%.

Capital Economics said: "May’s data clearly suggest that the manufacturing sector is continuing to struggle, not least when added to the fact that manufacturing employment has been contracting for the past four months. With global demand still subdued, we don’t anticipate a major recovery any time soon.

"That said, the rebound in the Empire State manufacturing index (reported earlier today) to +6.0 in June, from -9.0 previously, does at least suggest that the outlook for the factory sector may be improving a little, presumably as the drag from the dollar’s surge in late 2014 and early 2015 begins to fade."