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Originally published June 14, 2013 at 6:19 AM | Page modified June 14, 2013 at 7:32 AM

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US factory output rises just 0.1 percent in May

U.S. factories barely increased their output in May after two months of declines, a sign that manufacturing is providing little support for the economy.

AP Economics Writer

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WASHINGTON —

U.S. factories barely increased their output in May after two months of declines, a sign that manufacturing is providing little support for the economy.

The Federal Reserve said Friday that factory production rose just 0.1 percent in May from April. Output fell 0.4 percent in April and 0.3 percent in March.

Factories produced more autos, computers and wood products last month, offsetting declines in the production of furniture and primary metals.

Manufacturing output has risen just 1.7 percent in the past 12 months.

"Manufacturers are still struggling to cope with the ongoing weakness of global demand," said Paul Dales, senior U.S. economist at Capital Economics.

Overall industrial production was flat in May after a 0.4 percent drop in April. Utility output, which is heavily influenced by the weather, fell 1.8 percent after a 3.2 percent April drop. Mining output rose 0.7 percent after a 1.1 percent increase in April.

Manufacturing, the most critical component of industrial production, has struggled this year. Factories have been held back by weak economies overseas that are buying fewer U.S.-made goods. And American businesses have reduced their pace of investment in areas such as equipment and computer software.

The decline in output has held back hiring. Factories have slashed jobs in each of the past three months. And the Institute for Supply Management's manufacturing index fell in May to its lowest level since June 2009, the final month of the Great Recession.

Deep government spending cuts that began on March 1 may further reduce activity for some companies, particularly those in the defense industry.

And Europe, a key export market for the United States, remains stuck in recession. That has meant fewer purchases of U.S. goods. In the first three months of the year, U.S. exports to Europe fell 8 percent compared with the same period a year ago

However, not all areas of manufacturing are facing troubles. Automakers are reporting solid sales. Ford Motor Co. said U.S. sales rose 14 percent in May as demand for its F-Series pickup reached a six-year high. And Nissan's U.S. sales jumped 25 percent compared with a year ago.

There are signs that manufacturing may pick up in coming months. U.S. factories saw orders increase in April after a steep drop in March.

And consumers have continued to increase their spending this year, despite higher taxes that have reduced their take-home pay. Retail sales increased 0.6 percent in May, fueled by more purchases of cars and trucks, home improvements and sporting goods.

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