US industrial production down, idle factories at record

The hum of America's factories has reached its lowest level on record – again.

In May, the factory operating rate fell 0.6 percent from April's historic low to reach a new record of 65 percent, the Federal Reserve reported Tuesday. That means that slightly less than two-thirds of manufacturers' plants were operating last month – the smallest share in records going back to 1948.

The low in manufacturing was mirrored by the entire industrial sector, where capacity utilization fell in May to 68.3 percent, the smallest share in records going back to 1967.

Factories lay idle because industrial production fell 1.1 percent from April to May, which was a bigger decrease than the month before. The biggest decline came in automotive products, which fell 5.2 percent in May from a month earlier. Excluding that sector, industrial production still fell a disappointing 0.9 percent.

That's sobering news for investors looking for evidence of a recovery.

"Admittedly, production is no longer declining at the rates of 2 percent-plus seen at the end of last year," wrote economist Paul Dales of Capital Economics in Toronto. "Nevertheless, it is clear that both global and domestic demand remains weak and that an actual recovery is some way off."