US Factory Output Stalls in May as AI Spending Offsets Tariff and Oil Shock

3 articles · Updated · Reuters · Jun 15

U.S. factory production was unchanged in May, missing forecasts for a 0.2% gain after an upwardly revised 0.7% increase in April.
AI-driven equipment demand and tax incentives helped cushion manufacturing from import tariffs and the recent oil-price shock, even as some firms had pulled orders forward over fears the Iran war would disrupt supplies.
Motor vehicles and parts output rose 1.2%, semiconductors gained 2.4% and computer and electronic products climbed 0.9%, but a 0.9% drop in non-durable goods offset those advances.
New York Fed data showed June factory delivery times lengthened further and supply availability fell to a four-year low, while expected selling prices jumped to their highest since 2022.
Overall industrial production still edged up 0.1% in May, and economists said a durable end to the Middle East conflict could ease uncertainty while AI investment keeps parts of manufacturing supported.