- Real GDP contracted 0.3% in May, following a 0.5% decline in April.
- The drop in GDP in May spanned 10 of 17 major industries, with construction and high-contact services experiencing the biggest declines.
- Manufacturing output decreased 0.8%, its third decline in four months.
- Output was down in 6 of 11 major manufacturing subsectors, with food, chemicals, and fabricated metals contributing the most to the decline.
- Although the last two monthly GDP releases have been disappointing, the coming months are expected to bring much better news. Indeed, a preliminary estimate indicates that the economy rebounded by 0.7% in June. Moreover, the recovery is expected to strengthen in the second half of the year as the pandemic and related restrictions ease. Still, the outlook remains highly uncertain due to several factors, including the emergence of the more transmissible Delta variant and the persistence of global supply chain issues and cost pressures.
… Among the manufacturing subsectors that recorded an increase in May, the ones that contributed the most to growth were plastics and rubber products (+4.1%), motor vehicle and parts (+1.6%), and wood products (+1.2%). Despite the increase in motor and vehicle parts, output in May was still 26.0% below its pre-pandemic level, an indication of just how disruptive the global microchip shortage has been to automotive production. …