US manufacturing slows for second straight month in June

American manufacturing output slowed in June, the second straight monthly decline, causing a drop in overall industrial production, the Federal Reserve said Friday.

Total industrial output fell 0.2 percent last month after flatlining in May, due to the 0.5 percent drop in manufacturing, the data showed. It was far worse than what economists were expecting.

The report said the slowdown in manufacturing was widespread across many product categories, with declines of more than one percent in primary metals, machinery, and motor vehicles and parts, as well as petroleum, plastics and textiles. There were also big drops in food and beverages.


Rubeela Farooqi of High Frequency Economics said "output surprised to the downside," but production "continued to expand at a strong pace in the second quarter."

"Looking ahead, manufacturing activity is likely to face headwinds from moderating demand as well as ongoing supply dislocations and shortages from the war in Ukraine and Covid policy in China," she said in an analysis.

The Fed said overall output expanded at a 6.1 percent annual rate in the April-June quarter, while manufacturing increased 4.2 percent.

Mining output gained 1.7 percent in the month and the Fed said "strength in the oil and gas sector has been the primary impetus for the recent gains."

Utilities fell 1.4 percent in June, erasing most of May's gain, while industrial capacity in use slipped back to 80 percent, the lowest since March.