Industrial production dips in May

0.7% decline in manufacturing leads to overall 0.1% drop

JOSH BOAK

WASHINGTON — U.S. industrial production slipped 0.1 percent in May, primarily dragged down by a drop in manufacturing caused by a major fire at a parts supplier for trucks.

The Federal Reserve said Friday that the manufacturing component of industrial production fell 0.7 percent in May largely because of this disruption in truck assemblies.

A May 2 fire damaged the main plant at the Meridian Magnesium Products of America factory in Eaton Rapids, Mich., that makes motor vehicle parts. As a result, Ford had to temporarily lay off 7,600 workers as it cut production of the F-Series pickup, the top-selling vehicle in America.

The monthly drop should be followed by a rebound this month, said Daniel Silver, an economist at JPMorgan Chase.

“Disruptions associated with the fire should be temporary, and auto production schedules point to an increase in related output in June, undoing at least a good portion of the May decline,” he said.

Output at factories for metal, electrical equipment and apparel also declined, along with the 6.5 percent drop for motor vehicles and parts.

Still, factory output has improved 1.7 percent over the

past year and overall industrial production has increased 3.5 percent, while prices for materials continued to pick up, according to a survey released earlier this month by the Institute for Supply Management.

Despite positive economic reports, the tariffs announced by the Trump administration have generated turmoil and uncertainty.

President Donald Trump announced Friday a 25 per-

● cent tax on $50 billion worth of Chinese imports, part of his effort to reduce the trade gap with the world’s secondlargest economy. The tariffs prompted China to counter that it will retaliate with its own tariffs. The dispute could lead to higher prices and harm U.S. factories that depend on parts and raw metals from around the world, although Trump has said the moves will lead to a domestic manufacturing renaissance.

Trump has also announced steel and aluminum tariffs on U.S. allies such as Canada, Mexico and the European Union.

The utilities component of industrial output rose 1.1 percent in May. Mining output advanced 1.8 percent.

A stronger dollar also threatens to undermine demand for U.S. exports. At the same time, lower corporate and consumer taxes and a strong job market that’s boosting household demand will underpin business investment in coming months, analysts said.

AP Workers assemble washing machines at a Samsung factory in Newberry, S.C., in March. Despite a drop in industrial production in May, factory output has improved over the past year, a survey said earlier this month.