Plus: Factory Output Slips, Manufacturing Tech Demand Dips, Stainless Steel Production Falls, Jobless Claims Rise and New Grants for U.S. Manufacturers Announced.

Industrial Production Slips in May

Total output from United States factories, mines and utilities decreased 0.1 percent in May, as automotive production contracted for the first time in six months and other big-ticket items experienced contraction, according to the U.S. Federal Reserve last week.

Following a revised 1 percent increase in April and a 0.6 percent decline in March, industrial production reversed some of its earlier gains largely due to a dip in manufacturing output, which fell 0.4 percent, including a 1.5 percent drop in automotive production, last month. However, mining production rose 0.9 percent in May, while utilities output edged up 0.8 percent.

“Car and light truck production slowed to a seasonally adjusted annual rate of 10.08 million from 10.36 million in April, though the May reading was still the second-strongest of the year,” MarketWatch notes. “The output drop wasn’t limited to autos, however, with many categories seeking weakness. Paper product production dropped 1.9 percent, defense and space equipment output shed 2.2 percent and construction supplies output declined 1.2 percent.”

Meanwhile, the capacity utilization rate, an indicator of how much the industrial sector’s production capabilities are in use, fell to 79 percent in May, 0.2 percentage points down from April and 1.3 points below the long-run average from 1972-2011.

“The economy has slumped this spring after a promising winter. Hiring has sputtered and confidence has fallen. Consumers are spending less, which has slowed factory production,” the Associated Press reports. “Factories have been adding jobs at a healthy pace in the past two of years. But the sector isn’t large enough to carry the whole economy.”

Manufacturing Tech Demand Dips in April

The total value of manufacturing technology orders by U.S. manufacturers fell to $410.42 million in April, down 17 percent from March, according to the Association for Manufacturing Technology (AMT) last week. Despite the month-over-month drop, April orders were up 2.9 percent from the $398.73 million total reported for the same month in 2011.

Demand for machine tools and related equipment dropped on a month-to-month basis in all five major U.S. regions tracked by AMT.

Manufacturing technology orders in the South totaled $50.85 million in April, a 28.6 percent decrease from March and 1.1 percent less than the prior-year total. Western region manufacturing tech orders stood at $38.57 million in the latest month, 22.7 percent below the March total and 8.4 percent below the prior-year figure. In the Midwest, orders totaled $125.73 million, down 16.9 percent from March but up 2.9 percent over April 2011. Demand in the Central region fell 14.4 percent from March to total $128.96 million, but remained 4.2 percent above the April 2011 figure. Orders in the Northeast totaled $66.31 million in April, down 7.5 percent from March but up 11.8 percent from April 2011.

At $1.76 billion, the year-to-date value of U.S. manufacturing technology orders so far in 2012 remains 10.2 percent higher than in the same period last year.

Stainless Steel Output Falls in Q1

Worldwide stainless steel production totaled 8.6 million metric tons (Mt) in the first three months of 2012, up 2.7 percent over the previous quarter (Q4 2011) but down 2.8 percent from the prior-year period (Q1 2011), according to the International Stainless Steel Forum (ISSF) last week. The year-over-year comparison shows output is down in all regions of the world, particularly North and South America.

“The biggest decrease appears to be in the Americas region with a 22 percent drop in production during Q1 2012 compared to the same period last year,” the trade association for specialty steelmakers reports. “Total production is reported to be 0.6 Mt.”

However, ISSF notes that there are “discrepancies” in U.S. production data for raw stainless steel, which are being investigated.

Meanwhile, China’s Q1 production total declined 5 percent from Q4 2011, from 3.6 million to 3.4 million metric tons, and dropped 1.2 percent from Q1 2011. (Due to certain changes in reporting methods, ISSF notes “some uncertainty about the actual level of production in China.”) In the rest of Asia, stainless steel production edged up 2.3 percent over the previous quarter, from 2.17 million to 2.2 million metric tons. That total indicates a slight (0.6 percent) year-over-year drop.

Totaling 2.2 million metric tons in the latest period, the Western Europe/Africa region showed a 16.5 percent rise in production over Q4 2011 but a 0.3 percent year-over-year decline. In Central and Eastern Europe, quarter-to-quarter stainless production dropped 9.8 percent and year-over-year output fell nearly 15 percent.

“ISSF does not expect the negative growth rates to continue for the remainder of 2012,” the trade group says. “The current perception is that markets will be driven by real-demand and some restocking will occur in the second half of the year. For the full-year 2012, ISSF expects a slight increase on the record production level achieved in 2011.”

Weekly Jobless Claims Increase

New initial jobless claims increased in the latest week reported, adding to signs the labor market is struggling to improve. According to the U.S. Department of Labor, seasonally adjusted unemployment claims for the week ending June 9 rose by 6,000 to a total of 386,000, up from the previous week’s revised 380,000 total. The four-week moving average, which smoothes out short-term volatility, increased by 3,500 to 382,000.

“A pickup in dismissals may raise concern the labor market will have trouble rebounding after a slowdown in job creation in the past four months,” Bloomberg News notes. “Weaker economic growth and a lack of clarity about the business environment may discourage companies from hiring at a pace needed to speed up the expansion.”

The increase in unemployment claims came as a surprise, as economists polled by MarketWatch had forecast jobless claims would fall to 376,000 for the week. The disappointing data may spur the Federal Reserve, which convenes for a key policy meeting later this week, to enact additional monetary stimulus efforts to ease the impact of weaker job growth, as well as mounting economic problems in Europe.

“The slackening U.S. recovery and a worsening debt crisis in Europe have increased expectations of a further easing of monetary policy by the Fed, although economists are divided on whether the central bank will act when it holds it meets on Tuesday and Wednesday,” Reuters explains.

Manufacturing a New Internet

The Internet could be considerably faster and provide advanced support for a number of key industries, according to a government plan to overhaul infrastructure work and upgrade networking capabilities nationwide.

Last week, the White House introduced an initiative to accelerate broadband installation by allowing companies to lay cable during road construction projects, which could lower the cost of installation by up to 90 percent. The executive order, which was signed by President Obama on Thursday, will also enable broadband construction on large tracts of land and more than 10,000 buildings across the nation.

“At the same time, new applications of distributed cloud computing, virtualized networks that use software to simplify the flow of information, and symmetrical gigabit bandwidth connections all the way to your laptop, taken together, have the potential to reach speeds up to 250 times faster than today’s Internet,” Fast Company notes.

A related White House program, known as U.S. Ignite, will help establish public-private partnerships to develop next-generation broadband applications. The initiative includes 25 cities, as well as research universities, major electronics and software companies, entrepreneurs, developers and manufacturers, who will work together to harness the possibilities of the new, vastly accelerated, Internet infrastructure.

“Specifically, U.S. Ignite is targeting new applications in education, healthcare, clean energy, public safety and workforce development, including advanced manufacturing,” SmartPlanet explains. “The National Science Foundation (NSF) is investing a new round of $20 million toward this effort, and is using the money in part to fund grants, and to encourage proposals for demonstrations of advanced, high-bandwidth applications.”

New Grants Available for U.S. Manufacturers

The U.S. Department of Energy (DOE) last week awarded more than $54 million in grants that will be matched with $17 million in private-sector funding for 13 projects to advance new technologies, materials and processes that can help domestic manufacturers increase the energy efficiency of their operations and reduce costs.

Among the DOE award recipients: Air Products and Chemicals, Inc.; American Iron and Steel Institute; Delphi Automotive Systems, LLC; General Motors LLC; Lyondell Chemical Company; MEMC Electronic Materials, Inc.; MIT; PolyPlus Battery Company; Research Triangle Institute; $4,800,000; Teledyne Scientific and Imaging; the Dow Chemical Company; the University of Utah; and Third Wave Systems, Inc.

“We’re only funding things that are on the edge of their roadmaps, where given the constraints of quarter-to-quarter profitability they’re not able to invest,” David Danielson, the DOE’s assistant secretary for energy efficiency and renewable energy, told the Detroit Free Press. According to Danielson, the projects would take at least five to 10 years to reach the market.

Industrial processes consume about one-third of all energy produced in the U.S., representing a significant opportunity for innovative energy-saving technologies.

In a related development, the annual Small Business Innovation Research and Global Trade Summit next month will offer insights for small manufacturing businesses (those with fewer than 500 employees) on strategies for accessing more than $2.4 billion in federal grant money.

Hosted by Connecticut Innovations, the trade summit will provide an opportunity to speak directly with contractors seeking partnerships in the aerospace, defense, energy and chemicals industries, and experts will provide practical, useable advice and information on winning grants. Small manufacturers will also have the chance to present their innovations to major companies across a range of industries, including automation and robotics.