U.S. Manufacturing Posts Modest Gain as Business Equipment Output Rises

U.S. manufacturing output rose slightly in May, lifted by strong gains in business equipment and motor vehicle production, even as other parts of the industrial economy remained weak.

The Federal Reserve reported Tuesday that manufacturing output increased 0.1 percent last month, following a 0.5 percent drop in April. Within the category, business equipment production jumped 0.8 percent, marking a third consecutive monthly gain and bringing the index 2.7 percent above its year-earlier level.

Transit equipment led the gains, surging 6.4 percent in May. The Fed’s data show this subcategory, which includes commercial aircraft and transportation vehicles, has been volatile but overall remains a key driver of capital goods investment.

Motor vehicles and parts output rose 4.9 percent, also contributing to the rebound in durable goods manufacturing, which advanced 0.4 percent on the month. But excluding motor vehicles, factory output declined 0.3 percent, pointing to underlying softness in sectors such as machinery, fabricated metals, and nonmetallic minerals.

Nondurable goods production edged down 0.2 percent, reflecting declines in food, petroleum, and printing. Output of electrical equipment, appliances, and components rose 0.9 percent, a relatively strong showing in a sector closely tied to residential and commercial investment.

Overall industrial production, which includes mining and utilities alongside manufacturing, declined 0.2 percent in May. Utility output dropped 2.9 percent, driven by a 3.6 percent decrease in electricity generation. Mining output rose 0.1 percent, continuing its relatively steady performance over the past year.

Capacity utilization in the industrial sector declined slightly to 77.4 percent, below its long-run average of 79.6 percent. Utilization in manufacturing held steady at 76.7 percent.

While headline figures remain mixed, the continued strength in business equipment suggests that private-sector investment remains a source of support for the economy. With categories like transit and information-processing equipment maintaining upward momentum, the manufacturing sector shows signs of stability even as some consumer-facing and construction-linked areas slow.