US industrial production continued to wither into Q2 2025 as the May print came in a -0.2% MoM, below expectations of a slight 0.1% MoM increase. Manufacturing production did see a slight gain of 0.1% MoM, but the annual increase slowed to just 0.5% YoY, matching the slowest growth so far in 2025. The decline came from production in consumer goods (-0.2% MoM), nonindustrial supplies (-0.7% MoM), and materials (-0.2% MoM), while business equipment production expanded 0.8% MoM to offset the weaker categories. The continued deceleration in oil & gas production was a significant factory in industrial softness, causing the index for energy nondurable consumer goods to drop -3.2% MoM. On the other hand, auto & auto parts production was a bright spot, rising 4.9% MoM.

Along with soft production, capacity utilization continued its slide in May, dropping 0.3 ppts to 77.4%, the lowest since November 2024. Manufacturing utilization did hold steady on a monthly basis, but at 76.7%, it remained 1.5 ppts below the long-term average. Once again, we can highlight the weakness in oil & gas utilization as having a major impact since that segment fell -1.4 ppts to 88.5% (which is down -4.5 ppts since December 2024). Like the production figures, auto capacity utilization offset that weakness, jumping 3.2 ppts to 71.6%, the highest since June 2024. This rise is likely a result of Trump’s tariffs on foreign vehicles which are pushing auto manufacturers to ramp up production within the US.