U.S. Industrial Output Hampered

U.S. industrial production unexpectedly fell in May as manufacturing and mining activity remained weak, a sign that a strong dollar and spending cuts in the energy sector continued to constrain economic growth.  The softness in the production side of the economy contrasts starkly with recent upbeat data on retail sales, employment, consumer and small business confidence, which have pointed to a growth pickup after a sluggish start to the second quarter.

“Signs of spring remain largely absent in the industrial sector. The challenges of the stronger dollar and drop in energy prices linger,” said Tim Quinlan, an economist at Wells Fargo Securities in Charlotte, North Carolina.  Industrial output slipped 0.2 percent last month after declining 0.5 percent in April, the Federal Reserve said on Monday. Industrial production has been weak since December, and economists had expected output to rise 0.2 percent last month.

The data was likely to get the attention of Fed policymakers who meet on Tuesday and Wednesday, economists said.  The U.S. central bank is not expected to raise interest rates at this week’s policy meeting, but rather to wait until later this year.