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US manufacturing output increases solidly in May

U.S. manufacturing output rose solidly in May as production increased across the board, bolstering expectations that economic growth would rebound strongly this quarter.

Factory production increased 0.6 percent last month after slipping by a revised 0.1 percent in April, the Federal Reserve said on Monday.

Read MoreManufacturing gets boost from new orders: NY Fed

Economists polled by Reuters had forecast output rising 0.5 percent after a previously reported 0.4 percent decline.

The report was the latest evidence the economy was regaining steam after a dismal first quarter.

An employee welds truck floors panels at the Volvo AG New River Valley Plant in Dublin, Virginia,
Justin Ide | Bloomberg | Getty Images
An employee welds truck floors panels at the Volvo AG New River Valley Plant in Dublin, Virginia,

Motor vehicle output increased 1.5 percent last month after dipping 0.1 percent in April. There were also gains in the production of machinery, computer and electronic products, electrical equipment and appliances, and fabricated metal products. Production of primary metals slipped.

Mining output rose 1.3 percent in May, adding to April's 1.6 percent increase. But utilities production fell 0.8 percent, declining for a fourth consecutive month.

The rise in manufacturing and mining output helped boost overall industrial production by 0.6 percent in May. It had declined 0.3 percent in April.

Read MoreHow the Fed could shock markets this week

The amount of manufacturing capacity in use rose to 77.0 percent last month, the highest level since March 2008, from 76.7 percent in April.

Overall industrial capacity increased to 79.1 percent from 78.9 percent. It remained 1.0 percentage point below its long-run average.

Officials at the Fed tend to look at capacity use as a signal of how much "slack" remains in the economy, and how much room there is for growth to run before it becomes inflationary.

By Reuters

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