Manufacturing declines - The Roger Hedgecock Show - Talk Radio

Manufacturing declines

U.S. manufacturing output contracted in May for the second time in three months while a gauge in New York state fell sharply in June, the latest worrisome signs the American economy could be cooling.

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Factory production shrank 0.4 percent last month, the Federal Reserve  said on Friday. Total industrial output, which includes output at factories, mines and utilities, declined 0.1 percent.

Analysts polled by Reuters had expected total industrial production to rise 0.1 percent.

The declines were widespread within the factory sector. Output for durable — or long lasting — goods dropped 0.5 percent. Production for nondurables fell 0.2 percent.

Utilities increased 0.8 percent.

Capacity utilization, a measure of how fully firms are using their resources, slipped to 79.0 percent in May.

Officials at the Fed tend to look at utilization measures as a signal of how much "slack" remains in the economy — how far growth has room to run before it becomes inflationary.

In a related report, the New York Fed's "Empire State" general business conditions index fell to to 2.3, a 15-point drop from the month before and the lowest level since November 2011, and far below economists' expectations of 13.

Employment gauges also declined slightly, and indexes for the six-month outlook fell for the fifth consecutive month to 23.1, suggesting waning optimism about the medium-term.

The survey of manufacturing plants in the state is one of the earliest monthly guideposts to U.S. factory conditions.

"This survey is very volatile month to month so we can't extrapolate the state of the entire country's manufacturing base from this one region but New York was one of the standouts in May that is now showing its vulnerability," said Peter Boockvar, equity strategist at Miller Tabak in New York. "I'm sure we'll see more weakness in other regions as the global economy continues to slow."

Despite the weak numbers, the stock market opened higher Friday ahead of the weekends election in Greece.

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