US factory production remained sluggish in May, suggesting manufacturers are growing cautious in the face of tepid global demand and equipment spending.

The 0.1 per cent advance in output last month followed a revised 0.9 per cent increase in April, Federal Reserve data showed on Thursday (Jun 15). Total industrial production, which includes mining and utilities, fell 0.2 per cent.

The details painted a mixed picture. Factory production increased for motor vehicles, electronic equipment and appliances. Output for machinery, clothing and business equipment declined. 

The nation’s producers face a number of challenges including softer demand for merchandise as households direct more of their income toward services and experiences. Stricter lending standards and higher rates risk forcing some companies to tighten their belts on capital investment, while overseas customers are contending with muted economic growth.

That said, cooler demand for manufactured products, improving supply networks and easing commodity prices have all helped mollify input costs for producers.

Separate data on Thursday showed sustained consumer spending on merchandise in May, with retail sales rising 0.3 per cent in a broad-based advance. BLOOMBERG

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