U.S. industrial production in May contracted for the first time in four months, reflecting sharp declines in auto and machinery output and a dip in mining activity.

Industrial production decreased 0.1% last month, following an unrevised 0.8% rise in April and an downwardly revised 0.5% increase in March, previously reported as a 0.6% increase, the U.S. Federal Reserve said today in a monthly report.

May industrial capacity utilization also dropped, falling 0.2 percentage point to 81.7% from April’s unrevised level. May’s utilization rate was still somewhat higher than the 1972-2005 average of 81.0%.

The May data on industrial output were below Wall Street expectations. Economists had forecast industrial production to have increased by 0.2% last month. Capacity utilization had been expected to steady at 81.9%.

In May overall industrial production still grew 4.3% from a year earlier, while manufacturing output increased 4.9% from a year earlier.

Manufacturing registered a monthly output decline of 0.1% last month after a 0.7% rise the previous month. Meanwhile, manufacturing capacity utilization dipped 0.3 percentage point to 80.5% but was still above its long-run average.

Meanwhile, U.S. jobless claims dipped below the 300,000 threshold for the first time in nearly four months during the latest week, suggesting that employment conditions remain favourable.

Initial jobless claims decreased by 8,000 to a seasonally adjusted 295,000 in the week ending June 10, the U.S. Labor Department said today. That is the lowest level since Feb. 18.

The four-week moving average of new claims decreased last week by 12,250 to 315,750, the Labor Department said.