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Manufacturing Output Stalls for the First Time This Year
Total Industrial Production, Which Includes Output of Utilities and Mining, Rose 0.1%
Key Takeaways:
- U.S. manufacturing output stalled in May after four months of gains, with factory production flat from April, according to Federal Reserve data.
- The slowdown suggests supply chain disruptions from the Iran war and rising costs are weighing on activity, even as overall industrial production rose 0.1%.
- Durable goods and defense-related output continue to support manufacturing, but economists will watch whether cost pressures further dampen production in coming months.
U.S. manufacturing production stalled in May after four months of gains, suggesting problems with supply chains disrupted by the Iran war and soaring costs may be starting to weigh on activity.
Factory output was little changed last month after an upwardly revised 0.7% advance in April, Federal Reserve data out June 15 showed. The median estimate in a Bloomberg survey of economists called for a 0.3% advance.
Total industrial production, which also includes output of utilities and mining, rose 0.1%.
The report is somewhat at odds with signals from recent surveys, which have indicated a pickup in activity amid customer stockpiling induced by the war, rising defense-related orders and the ongoing data center buildout.
The June 15 figures may be a sign that surging costs are starting to bite after a separate report last week showed prices received by producers rose in May from a year earlier at the fastest pace since 2022.
Manufacturing excluding motor vehicles and parts was also flat in May, according to the Fed report. Mining output, which includes energy extraction, increased 1.3%. Utilities output fell.
May #IndustrialProduction: Total +0.1%, Mfg. +0.0%, Utilities -0.4%, Mining +1.3%; #CapacityUtilization 76.2% https://t.co/nYuGKYaV9g #FedData — Federal Reserve (@federalreserve) June 15, 2026
The data showed a split between durable goods manufacturing, which continued to advance, and nondurable goods manufacturing, which declined. That decrease reflected a pullback in output for petroleum and coal products, plastics and rubber, and textiles.
Production in categories exposed to the data-center buildout, including computers and electronic products, electrical equipment, fabricated metals, machinery and primary metals, increased. Those industries have helped support factory activity even as shortages of inputs like memory chips and plastic resins are pressuring supply chains.
Production of defense and space equipment climbed for a sixth straight month to the highest level since December 2019. Economists see efforts to replenish munitions used in the war, as well as the potential for rising exports as part of recent trade deals, as one possible driver of growth this year.
