Factory production unexpectedly declined in May as the slump in energy output deepened.
The 0.2 percent decrease at manufacturers followed a 0.1 percent increase in April, figures from the Federal Reserve in Washington showed Monday. Total industrial production, which also includes mines and utilities, also dropped 0.2 percent.
Production of consumer energy products declined for a third consecutive month, exacerbating a decrease in other non-durable goods such as foods and chemicals that swamped continued gains among automakers. The sluggish data signal that a stronger dollar and decrease in fuel prices are still rippling through the economy, holding back American factories.
“The global economic situation is not ideal,” Stephen Stanley, chief economist at Amherst Pierpont Securities LLC in Stamford, Connecticut, said before the report. As a result, “any growth that you see in manufacturing is going to be predominantly driven by domestic demand.”