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U.S. manufacturing production up in May for first time this year

Christian Fernsby |
Official data on manufacturing output showed production rising in May, but the muted increase leaves the sector with a big hill to climb in June to avoid falling into contraction for a second successive quarter, corroborating earlier weak PMI survey data from IHS Markit.

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Manufacturing output rose 0.2% in May according to official data from the Federal Reserve.

The rise was the first recorded so far this year, so represented a welcome sign of revival.

However, survey data hint strongly that the underlying business environment remained subdued in May, meaning growth could remain weak or production even contract in June.

The sector is consequently close to falling into a technical recession.

Even with the 0.2% expansion of production in May, output so far in the second quarter is running 0.6% below that of the first quarter.

Barring revisions to back data, it would need a 1.6% surge in production to avoid manufacturing output falling in the second quarter.

With output having dropped 0.6% in the first quarter, two consecutive quarters of decline would meet the definition of a recession.

The last time the manufacturing economy recorded two or more consecutive quarters of decline was 2015-16, and prior to that 2009.

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