Ahead of the Bell: US Industrial Production
WASHINGTON (AP) — Output at U.S. factories, mines and utilities likely rebounded in May but not enough to signal a manufacturing resurgence.
Economists forecast that overall industrial production rose 0.4 percent in May, according to a survey by FactSet. That would mostly reverse a 0.5 percent decline in April.
Still, factory output, the most important component of industrial production, is expected remain weak after falling 0.4 percent in April.
The Federal Reserve will release the May industrial production report at 9:15 a.m. EDT Friday.
Part of the April decline in manufacturing output was caused by a drop in auto production, which likely reversed in May. But most other manufacturers have struggled this year.
Weak economies overseas have cut into U.S. exports. And American businesses have reduced their pace of investment in areas such as equipment and computer software.
Economists at JPMorgan Chase predict flat factory production in May after seeing a batch of disappointing data.
The government's May employment report showed factories slashed jobs for the third straight month. And the Institute for Supply Management's manufacturing index fell in May to its lowest level since June 2009, the final month of the Great Recession.
Deep government spending cuts that began on March 1 may reduce activity for some companies, particularly those with defense contracts.
And Europe, a key export market for the United States, remains stuck in recession. That has meant fewer purchases of U.S. goods. In the first three months of the year, U.S. exports to Europe fell 8 percent compared with the same period a year ago
However, not all areas of manufacturing are facing troubles. Automakers are reporting solid sales. Ford Motor Co. said U.S. sales rose 14 percent in May as demand for its F-Series pickup reached a six-year high. And Nissan's U.S. sales jumped 25 percent compared with a year ago.
There are also signs that manufacturing may pick up in coming months. U.S. factories saw orders increase in April after a steep drop in March.
And consumers have continued to increase their spending this year, despite higher taxes that have reduced their take-home pay. Retail sales increased 0.6 percent in May, fueled by more purchases of cars and trucks, home improvements and sporting goods.