The numbers: Industrial production fell 0.2% in June, the Federal Reserve reported Friday. This is the first decline of the year.
Wall Street economists had expected a 0.1% gain in factory output, according to a survey by The Wall Street Journal.
Production in May was revised down slightly to an unchanged reading from the initial estimate of a 0.1% gain.
Capacity utilization slipped to 80% in June from 80.3% in the prior month. The capacity utilization rate reflects the limits to operating the nation’s factories, mines and utilities.
Economists had forecast a 80.5% rate.
Key details: Manufacturing fell 0.5 in June for the second straight month.
Motor vehicles and parts output fell 1.5% after a 1.9% fall in the prior month. Excluding autos, total industrial output fell 0.1%.
Utilities output fell 1.4% in June on cooler summer temperatures. Mining output, which includes oil and natural gas, rose 1.7% after a 1.2% gain in the prior month.
Big picture: Economists says the factory sector has worked through order backlogs that rose sharply during the pandemic. The sector is now facing softening demand and modest declines in output could come during the second half of the year, said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Market reaction: Stocks
opened sharply higher on retail sales and earnings reports.