By Xavier Fontdegloria

Industrial production in the U.S. rose for a third straight month, but supply-chain disruptions continued to restrain industrial output growth.

Industrial production--which includes factory, mining and utility output--increased at a seasonally adjusted 0.8% in May compared with April, the Federal Reserve reported Tuesday. The reading is above forecasts from economists surveyed by The Wall Street Journal, who expected a 0.6% rise.

April's industrial production gain was revised down to 0.1% from an initial estimate of a 0.7% increase.

Manufacturing output--the biggest component of industrial production--climbed 0.9% in May from the prior month, supported by a 6.7% rebound in motor vehicle and parts production following a sharp fall the previous month.

However, auto production continued to be hampered by shortages of semiconductors, the Fed said.

Strength in the industrial sector continued in May amid red-hot demand fuelled by high consumer spending, but factory output is increasing at a slower pace than would be the case in the absence of widespread materials shortages and slowing delivery times. "The speed limit for production growth is being set by the availability of scarce resources," economists from Wells Fargo said.

Industrial production in May was 16.3% above the same month a year earlier, but 1.4% below pre-pandemic levels.

Utilities output increased 0.2% in May, while mining output rose 1.2%, the Fed said.

Capacity utilization, which reflects how much industries are producing compared with what they could potentially produce, increased to 75.2% in May. Economists expected a 75.1% reading. Capacity utilization for manufacturing rose by 0.7 percentage points to 75.6%.

Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com

(END) Dow Jones Newswires

June 15, 2021 09:51 ET (13:51 GMT)

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