he Federal Reserve Board’s monthly reports on industrial production used to get a fair bit of attention in the business press, but May’s 0.7 percent decline in manufacturing activity seems to have passed largely unnoticed. These data are erratic and subject to large revisions, so this is hardly an end of the world kind of number, but it certainly is not a figure consistent with the investment boom promised by proponents of the tax cut.
It is also consistent with the reported fall in the length of the average workweek in manufacturing reported in the May Employment report from the Bureau of Labor Statistics. This decline in hours led to a 0.3 percent decline in the index of aggregate hours for the month.
These are the sort of drops that are expected when there is an unusual weather event like a big snowstorm or a hurricane hitting a major population center. However, there were no obvious events in this category in May, which does raise the possibility that we may be seeing a turning point in manufacturing with the brief upturn over the last couple of years petering out.
This column originally ran in Beat the Press.