Increasing manufacturing in May. Expectation is less in June due to FED Rate

May 2024 manufacturing report. Manufacturing was up in May after following two months of it being down in April and March. There is belief, manufacturing will be down in June as the FED did not reduce the FED Rate. I also suspect manufacturing will not take off in June. However, I believe it will be no worst then May. The demand is there. In order to meet demand, companies will stay within their budgets to manufacture. Unless there is a price increase which will fund them or increases in demand.

Personal point, I worked in supply chain and manufacturing all of my life. Further on down this piece, you will see a percentage quoted for total economy occupied by manufacturing. Ten percentage is unbelievable. Are we that much more efficient? Probably not and the percentage does not necessarily relate to volume. If there is one thing I can add to this, it is manufacturing plays an important role in supply chain. Doing it at home is far more efficient than tackling the control of manufacturing and shipping thousands of miles away.

If you can not see it or walk through the site of manufacture, you have little control over cost, quality, and schedule. We should not lose this capability.


US manufacturing production surges 0.9% in May; beats monthly expectations

US manufacturing production surges in May

by Lucia Mutikani

taken from Washington (Reuters)

Production at U.S. factories increased more than expected in May, recouping all the declines in the prior two months, However, the momentum is unlikely to be sustained amid higher interest rates and softening demand for goods.

Manufacturing output jumped 0.9% last month (May) following a revised 0.4% drop in April, the Federal Reserve said on Tuesday. Economists polled by Reuters had forecast factory output rebounding 0.3% after a previously reported 0.3% fall in April. Production at factories had declined in March and April. It gained 0.1% year-on-year in May.

Accounting for 10.4% of the economy, manufacturing is being tripped up by higher borrowing costs. The Institute for Supply Management published a survey earlier this month which found “demand remains elusive as companies are unwilling to invest due to current monetary policy and other conditions. According to the ISM “these investments include supplier order commitments, inventory building and capital expenditures.”

Spending on goods declined in first quarter for the first time in 1-1/2 years. The Fed last week kept its benchmark overnight interest rate in the 5.25%-5.50% range, where it has been since last July. U.S. central bank officials delayed the start of rate cuts to potentially as late as December. Even so policymakers are discussing a quarter-percentage-point reduction for this year.

In Other Areas of Manufacturing

Motor vehicle and parts output rebounded 0.6% last month after tumbling 1.9% in April. Durable goods manufacturing production increased 0.6%. There were large increases in the output of wood products, machinery, computer and electronic products as well as furniture and related products.

Nondurable manufacturing production shot up 1.1%, with a 1.5% fall in printing and support offset by sturdy gains elsewhere.

Mining output climbed 0.3% after falling for two straight months. Utilities production advanced 1.6% after rebounding 4.1% in the prior month.

Overall industrial production accelerated 0.9% in May. That followed an unchanged reading in April. Industrial production rose 0.4% year-on-year in May.

A measure of how fully firms utilizing their resources, capacity utilization for the industrial sector rose to 78.7% from 78.2% in April. It is 0.9 percentage points below its 1972–2023 average. The operating rate for the manufacturing sector increased to 77.1% from 76.6% in the prior month. It is 1.1 percentage points below its long-run average.

Manufacturing added jobs in May, but still shows signs of softening, Irina Im