Associated Press Industrial production rose 0.4% in May, the Federal Reserve reported Friday, but it is still down 1.5% from December 2018, a possible sign the trade war is starting to bite.
Consumer spending rose 0.5% in May and the April figure was revised upward to 0.3%, the government said Friday.
Saturday, June 15, 2019 1:00 am
Retail, industrial production rise
WASHINGTON – Americans stepped up their retail spending last month, a sign that recent worries about cautious consumers dragging on growth may have been overdone.
The Commerce Department said Friday that retail sales rose 0.5% in May, after a smaller gain of 0.3% in the previous month. April's figure was revised up from an earlier estimate that had showed a decline.
The report suggests that American consumers are still spending at a healthy pace, even as the stimulus from tax cuts fades.
In June, the economy reached its 10th year of expansion, tying the 1990s as the longest on record. Measures of consumer confidence, after stumbling this spring amid the ongoing U.S.-China trade war, have returned to nearly 19-year highs.
The figures also lessen pressure on the Federal Reserve to cut short-term interest rates. Other recent data, such as weak job growth in May and choppy consumer spending earlier this year, has led most economists to expect at least one or two cuts this year.
“The consumer didn't fall by the wayside,” David Berson, chief economist at Nationwide Financial, said. “The concerns that the economy is really slipping dangerously are overstated at this point.”
Retail sales had been uneven earlier this year, making it harder for economists to get a handle on consumer spending. But with April's revision, sales have now increased for three straight months. And with the unemployment rate at a five-decade low of 3.6% and wage gains easily outpacing inflation, consumer spending will likely keep growing this year.
U.S. industrial production improved in May, but manufacturers showed weakness despite eking out a slight gain.
The Federal Reserve said Friday that industrial output, which includes factories, utilities and mines, rose 0.4% in May, after tumbling 0.4% in April.
Manufacturing output increased just 0.2% last month, not enough to overcome declines in prior months. Factory production is down 1.5% since the end of 2018, an indication of the potential damage from the import taxes the Trump administration has placed on China. During the first quarter of this year, motor vehicle production plunged 14.9%. Furniture output fell 5.8%. Clothing production has dropped 22.6%.