03:59 PM EDT, 06/17/2025 (MT Newswires) -- Industrial production in the US unexpectedly fell last month as utilities' output declined, data from the Federal Reserve showed Tuesday.

Industrial output contracted by 0.2% in May following upwardly revised 0.1% growth in the month prior. The consensus was for a flat reading in a survey compiled by Bloomberg. Annually, industrial production grew 0.6% last month.

The index for utilities fell 2.9% sequentially, driven by declines in the output of power companies.

Manufacturing production increased 0.1% after a 0.5% contraction in April. The index for durable manufacturing turned positive, while the nondurable component decreased 0.2%, the data showed.

New risks to industrial output have emerged, Oxford Economics said in remarks emailed to MT Newswires, pointing to higher oil prices and a tax proposal that could deter foreign direct investment.

"Nevertheless, industrial activity is poised for a rebound in 2026 thanks to increased defense spending, tax incentives for certain business investment, and further interest-rate relief from the Federal Reserve," Oxford Lead US Economist Bernard Yaros said.