Implications:  After hitting the highest level on record in April, industrial production slipped 0.1% in May, primarily due to a major fire at a parts supplier in central Michigan that does business with many automakers around the country.  Due to the disruption, auto production fell 6.5% for the month, the largest single-month decline since 2011.  But excluding the drop in autos, industrial production increased 0.3% in May, a perfectly respectable number.  The worst news in today's report was that manufacturing excluding the auto sector, what we call "core" production, declined 0.2% in May.  That said, it's not unusual for that number to bounce up and down from month to month while the trend moves higher. For example, the past year has seen core production rise 2.0% despite seven of the twelve months showing declines.  The best news in May came from mining, which rose 1.8%, the fourth consecutive monthly gain, on the back of healthy increases in oil and gas extraction.  In the past year, mining is up 12.5%.  And the rig count has continued to rise in recent weeks, suggesting gains in mining production will continue in the months ahead.  Meanwhile, utilities output remained strong, rising 1.0%, as the warmest May on record drove up demand for air conditioning.  In other manufacturing news this morning, the Empire State index, a measure of factory sentiment in New York, surged to 25.0 in June from 20.1 in May, signaling growing optimism in the region.

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