Manufacturing production decreased by 0.2 percent in May, falling back again after very modest increased in both March and April. Overall, these data confirm that manufacturing activity has been weak since November, with contractions in four of the past six months. The year-over-year pace reflects this deceleration, shifting from a more-robust pace of 4.5 percent in November to 1.8 percent today. Capacity utilization has also declined for five consecutive months, down from 79.6 percent in December to 78.1 percent in May.
Overall, these figures mirror other data illustrating how a number of economic headwinds have challenged the manufacturing sector in the early months of 2015. The most recent NAM Manufacturers’ Outlook Index, for instance, has dropped from 61.7 in December to 51.7 in June, a significant decline in sentiment in such a short period of time. In addition, estimates of growth for sales, capital spending and employment have also decelerated sharply, even as they continue to reflect modest growth moving forward. On the other hand, exports are expected to grow more sluggishly, with a stronger U.S. dollar and slowing economies abroad dampening demand. (continue reading…)