Manufacturing Declines in U.S.

Output of U.S. Manufacturing declined during May. It was the second time in the past three months the sector has contracted. An important gauge for manufacturing for New York dropped sharply in the first two weeks of June as well, adding to the troubling signs the economy in the U.S. is starting to slow down.

Factory output declined by 0.4% in May said the Federal Reserve early Friday. Total output in the industrial sector, which includes mines, factories and utilities declined by one tenth of one percent in May. Analysts had predicted that total production of the sector would increased by at least 0.1%

Declines in factories were widespread. Durable goods output, which are goods that are long lasting dropped by 0.5%. Nondurable goods production was down by 0.2%, while utilities were up 0.8%.

Capacity utilization, which measures how completely firms are using resources, fell to 79% during May. Federal Reserve officials look at measures of utilization as a sign of the amount of slack remaining in the U.S. economy, a way to judge how much more room, growth has until it becomes inflationary.

In another report the New York Empire State business conditions index from the Fed fell all the way to 2.3, a drop of 15 points from the previous month. It is at its lowest level since the end of October 2011 and much below what were the expectations of economists.

Employment also declined and indexes that gauge six-month outlooks dropped for the fifth straight month to 23, which suggests a lowering of optimism for the medium term.