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Metal producers slower in May vs. April; fabricators flat

Keywords: Tags  metals producers, metal fabricators, industrial production, capacity utilization, mining, Erik Johnson, IHS Global Insight, sequester Federal Reserve Board

CHICAGO — Primary metals producers saw both capacity utilization and output fall in May, while fabricators’ activity remained flat compared with April.

Producers’ capacity utilization stood at 72.6 percent, down 0.7 points from April’s 73.3 percent to the lowest level in the past six months, according to Federal Reserve Board data. Metal fabricators’ capacity utilization of 84.7 percent was unchanged from April but trailed the six-month high of 85.6 percent in February.

The industrial production index for primary metals producers fell to 96 in May from 97 the previous month, also the lowest level in the past six months, while the production index for fabricators was flat at 94.6 but fell below the 95.5-point high seen in the past six months.

The mining industrial production index reached 117.5 in May, the highest level in the past six months, while capacity utilization rose 0.3 points from April to 88.2 percent.

May’s index for motor vehicle output was at 105.8, with capacity utilization at 75.6 percent, both six-month highs.

"The numbers may indicate a downshifting growth profile for the manufacturing sector. Manufacturing did improve by 5 percent annualized in the first quarter, but only a strong June reading would forestall a second-quarter contraction," Erik Johnson, senior U.S. economist at Lexington, Mass.-based consultancy IHS Global Insight Inc., said. "The sequester will hurt growth through the end of the year. Slowing growth in emerging markets and a lengthy eurozone recession have muted foreign demand. This is hurting manufacturing and prompting businesses to remain ultra cautious about hiring and capital spending."

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