The outlook for the manufacturing industry is becoming increasingly unclear, with U.S. industrial output declining for the second time in three months

Due to a decline in utility output and the manufacturing sector struggling to gain momentum amid weakening demand, U.S. industrial output fell in May, marking the second decline in three months.

Data released by the Federal Reserve on Tuesday showed that U.S. industrial output unexpectedly decreased by 0.2% month-on-month in May, below market expectations of no change, while the April output data was slightly revised upward to an increase of 0.1%.

Industrial output includes three sub-sectors: manufacturing, mining, and utilities. By segment, U.S. manufacturing output increased slightly by 0.1% in May. Utility production fell by 2.9%, while mining and energy extraction saw a slight increase.

Benefiting from a rebound in automobile assembly output, manufacturing output increased slightly by 0.1%

The performance within manufacturing was mixed.

The Federal Reserve stated that manufacturing output increased slightly by 0.1% in May, after experiencing the largest decline since October of last year in April. The slight increase in manufacturing output was mainly due to a nearly 5% surge in automobile assembly output, with the annualized automobile assembly output reaching 11.19 million units in May, the fastest growth rate in over a year. Meanwhile, the production of aerospace equipment also saw an increase.

However, excluding automobiles, other manufacturing outputs have declined for two consecutive months, with particularly noticeable decreases in machinery and metal products, which dragged down overall performance.

Production in consumer goods manufacturing (including automobiles, home appliances, and electronics) has declined for the third consecutive month, reflecting a cooling in consumer demand. Conversely, production in commercial equipment manufacturing accelerated.

Cooling consumer demand leads to corporate hesitation

Although the temporary agreement reached between China and the U.S. helps alleviate market tensions, the constantly changing U.S. trade policies and tariff arrangements make it difficult for companies to assess the true demand situation both domestically and internationally, resulting in a more uncertain short-term outlook for manufacturing.

Some companies have announced medium- to long-term plans to build production facilities in the U.S., but due to ongoing congressional debates over tax and fiscal spending bills, most companies remain cautious about whether to upgrade their production capacity.

Additionally, another report released on Tuesday indicated that retail sales fell for the second consecutive month in May, suggesting that consumer spending, which surged earlier in the year, has cooled due to concerns over tariffs and personal financial situations.

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