A slowdown in US manufacturing held down industrial output growth in May, but oil and gas extraction jumped for the third straight month, according to data Friday from the Federal Reserve.
Total industrial production increased 0.2 percent compared to April, according to the report, much slower than the prior month and far weaker than economists had expected.
Declining output for durable goods like machinery pulled manufacturing down 0.1 percent in the month, but the sector is still up 4.8 percent over the past 12 months.
However, mining increased 1.3 percent in May, the third consecutive month over one percent, as oil and gas extraction has averaged over 2 percent.
Oil and gas well drilling surged 6.2 percent in the month, and has surged 57.2 percent since May 2021, according to the report, good news for American drivers facing record gas prices at the pump.
The data show how “producers slowly begin to expand supply in response to elevated energy commodity and fuel prices,” said Mickey Levy of Berenberg Capital Markets. Well drilling “has surged from its mid-2020 nadir, and is now above its pre-pandemic level.”
He also pointed to the 0.7 percent gain in auto manufacturing as a “bright spot” in the report as carmakers work to replenish depleted inventories.
Increased production as the shortage of semiconductors is resolved could help reduce new and used car prices that have been a key factor in rising US inflation.
Utilities output rose one percent in the month, while industrial capacity in use edged up to 79.0 percent.