By Harriet Torry and David Harrison

WASHINGTON--U.S. industrial output was flat in June, as increases for the manufacturing and mining sectors were offset by a decline in utilities output.

Industrial production, a measure of factory, mining and utility output, was unchanged in June from the prior month, the Federal Reserve said Tuesday.

Economists surveyed by The Wall Street Journal had expected a seasonally adjusted 0.2% increase last month. May industrial production was unrevised at a 0.4% increase.

From a year earlier, industrial production rose 1.3% in June.

Output at U.S. factories rose 0.4% in June and the mining sector saw a 0.2% increase. The manufacturing industry accounts for about 75% of the nation's total industrial output, and it got a boost in June from a 2.9% increase in motor vehicles and parts.

Utility production dropped 3.6% in June, as milder-than-usual weather meant lower demand for air conditioning, the Fed said.

Capacity utilization, which reflects how much industries are producing compared with what they could potentially produce, slipped by 0.2 percentage point to 77.9% in June. Economists had expected 78.1%.

Industrial production has struggled this year, due in part to trade-related headwinds. For the second quarter as a whole, industrial production declined at a 1.2% annual rate, dropping for the second quarter in a row.

Broader economic growth was strong in the first quarter and the labor market has continued to add jobs.

Retail sales rose a seasonally adjusted 0.4% in June from a month earlier, the Commerce Department said Tuesday. The June rise exceeded economists' expectations and wrapped up a solid quarter for the resilient U.S. consumer.

Still, Tuesday's data from the Federal Reserve follow some signs of slowing momentum in the factory sector.

An index of factory activity produced by the Institute for Supply Management slipped to 51.7 in June, the third straight month of slowing expansion, as manufacturers confronted renewed trade tensions and slowing growth abroad.

U.S. manufacturers face higher costs for many components and metals because of U.S. tariffs on goods from China and a strong dollar that makes U.S. exports more expensive.

Though manufacturing accounts for a small share of gross domestic product, the sector is highly sensitive to shifts in global demand, making it a bellwether for the broader U.S. economy.

Forecasting firm Macroeconomic Advisers is projecting gross domestic product grew at a 1.8% seasonally adjusted annual rate in the second quarter, a slowdown from the 3.1% growth rate in the first three months of the year.

(END) Dow Jones Newswires

July 16, 2019 09:30 ET (13:30 GMT)

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