Industrial production declined for the second month in a row on a monthly and year-on-year basis. Output fell 0.5 percent in May after contracting 1.4 percent in April, while falling 0.9 percent from May of last year.

The manufacturing sector produced 1.0 percent less in May, extending April's 0.7 percent contraction, and fell a marginal 0.1 percent from its year-ago level. Most of the main components within the sector fell, with coke and refined petroleum product output falling 6.1 percent in May after a 14.3 percent drop the previous month.

Transportation equipment output rose 0.9 percent, led by higher production of aircraft, ships and locomotives which rose 2.8 percent in May, recovering some of April's 3.7 percent contraction.

Production of intermediate goods and consumer non-durables saw declines of 1.6 percent in May, while the output of consumer durables fell 1.0 percent. Energy production rose 1.3 percent.

The industrial sector certainly under pressure with no quick recovery on the horizon, as seen with the manufacturing PMI for June, which fell to 48.1, marking the 29th consecutive month of contraction. The ECB recently cut its policy rates again, and European countries are planning to ramp up defense spending. That has led to an improved outlook, but that will still take time to filter through to the industrial sector.

Industrial production measures the physical output of the nation's factories, mines and utilities. Manufacturing is seen as the best guide to underlying developments as some sectors can be very volatile and cause misleadingly large short-term swings in total industrial production.

Investors want to keep their finger on the pulse of the economy because it usually dictates how various types of investments will perform. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more subdued growth that won't lead to inflationary pressures. By tracking economic data such as industrial production, investors will know what the economic backdrop is for these markets and their portfolios. Like the PPI and the orders data, construction is excluded from the data. This report has a big influence on market behavior. In any given month, one can see whether capital goods or consumer goods are growing more rapidly. Are manufacturers still producing construction supplies and other materials? This detailed report shows which sectors of the economy are growing and which are not.