According to the Federal Reserve's data released on Tuesday, US factory output exceeded expectations and experienced a significant increase in May, with a notable rise in utilities production. This suggests a recovery in the manufacturing sector last month, despite the Fed maintaining high interest rates to combat inflation, which has impacted the sector. The central bank has reduced the projected number of rate cuts this year from three to one due to stalled progress against inflation in the first quarter. Industrial production surged by 0.9% in May compared to the previous month, significantly outperforming the modest gains of March and April. This increase was also well above the market forecast of a 0.4% rise, as reported by Rubeela Farooqi, Chief US Economist at High Frequency Economics, noted in a client note that industrial and manufacturing production was stronger than anticipated in May, and a future Fed rate cut should bolster factory activity. Among major industry groups, mining and utilities production rose by 0.9% and 1.6% respectively from April, with mining production increasing by a modest 0.3%. Bernard Yaros, Lead US Economist at Oxford Economics, highlighted that manufacturing was the key driver of the industrial production increase in May, aided by unusually warm weather boosting utilities output. The significant monthly increase in production resulted in a year-on-year positive trend, with factory output up by 0.4% since May 2023, according to the Fed.