US industrial activity slumped 0.4% in May, well below expectations. The monthly decline reverses April’s bounce and throws cold water on the notion that output was heading toward a summer revival. The manufacturing component fell, too, posting a 0.4% drop that pushed this slice of output into the red in year-over-year terms for the first time this year, according to this morning’s update from the Federal Reserve.
Industrial production overall continues to slide in the one-year column. The 1.4% annual decrease through May marks the ninth straight month of contraction—the longest run of red ink since the Great Recession.
Today’s news gives the Fed another excuse to delay raising interest rates at today’s FOMC meeting. The ongoing weakness in industrial activity also keeps the crowd wondering if the US macro trend is stumbling. Although a formal recession signal is still MIA, based on a broad review of available numbers through May, the persistently negative industrial trend is a reminder that the economy has run out of road for shrugging off disappointing data.