Nascent Pickup In Industrial Momentum

Industrial production rose 0.9% M/M in May, well above the 0.3% expected and 0.0% (unrev) prior. Manufacturing production likewise rose 0.9% (-0.4% prior rev from -0.3%; March rev to -0.1% from +0.2%). Utilities jumped by 1.6% M/M (4.0% prior rev from 2.8%, though March was rev down sharply to -0.3% from the previous +1.6% estimate).

• Mining output rose 0.3% after two consecutive declines. Durable goods manufacturing rose 0.6%, while nondurables rose 1.1%.
• This was a solid report after a cumulatively flat several months (the level of industrial production is now back at an 8-month high). Indeed, beyond the month-to-month noise in areas such as utilities, industrial production is regaining momentum despite continued weakness in major surveys.
• The 1.8% 3M/3M annualized print in May was the highest since May 2023, with manufacturing's 2.3% rate the fastest since June 2022. Capacity utilization is now at its highest since November 2023.
• While IP contracted in Q1, as one of the quasi-official "recession indicators", the pickup in IP over the last couple of months confirms that there is little hard evidence of recession - industrial or otherwise - in the 2nd quarter.