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U.S. Industrial Production Unexpectedly Drops 0.5% In April

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Industrial production in the U.S. unexpectedly showed a notable decrease in the month of April, according to a report released by the Federal Reserve on Wednesday.

The Fed said industrial production fell by 0.5 percent in April following a revised 0.2 percent uptick in March.

Economists had expected production to come in unchanged compared to the 0.1 percent dip originally reported for the previous month.

The unexpected drop in production partly reflected a sharp pullback in utilities output, which plunged by 3.5 percent in April after jumping by 2.2 percent in March.

Manufacturing output also slumped by 0.5 percent in April after coming in unchanged in the previous month.

On the other hand, the Fed said mining output surged up by 1.6 percent in April after falling by 0.4 percent in March.

"The weakness in industrial production, while worse than expected in April, is consistent with an expected inventory correction," said FTN Financial chief economist Chris Low.

The report also said capacity utilization for the industrial sector dropped to 77.9 percent in April from a revised 78.5 percent in March.

Economists had expected capacity utilization to edge down to 78.7 percent from the 78.8 percent originally reported for the previous month.

Capacity utilization in the utilities and manufacturing sectors dropped to 76.2 percent and 75.7 percent, respectively, while capacity utilization in the mining sector rose to 91.4 percent.

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