U.S. factory production plummets by most on record
U.S. factory production plummeted in April by the most in records back to 1919 as coronavirus-related shutdowns exacted a bigger toll on the economy.
Output slumped 13.7% from the prior month after a revised 5.5% decrease in March, Federal Reserve data showed Friday. The median forecast in a Bloomberg survey of economists called for a 14.6% decline. Overall industrial production — which also includes output at mines and utilities — dropped 11.2% in April.
Manufacturers in the U.S. were among the first to experience the pandemic’s economic drag as producers fell victim to supply-chain disruptions, a severe weakening in the exports market and a drop in domestic demand.
Meanwhile, output fell 0.9% at utilities and decreased 6.1% in mining. Oil and gas well drilling plummeted a record 28% as a collapse in crude prices prompted swift cutbacks in exploration. According to the latest Baker Hughes data, the oil and gas well rig count stood at 374 last week, the lowest in records back to 1974.
The Fed’s report also showed capacity utilization, which measures the amount of a plant in use, slid to 64.9%, the lowest in records back to 1967. At manufacturers alone, utilization dropped to 61.1%, an all-time low in data to 1948.
Motor vehicle production slumped to a 70,000-unit annualized rate, compared with 11 million two months earlier, the Fed said.
The industrial production report traces its roots back to the Woodrow Wilson administration. In 1919, when the nation was transitioning to a peacetime economy after World War I, the Fed began publishing monthly production data for a variety of goods. Three years later, it developed indexes of industrial activity within manufacturing, mining and agriculture.
The Fed said the production indexes were adjusted to account for the output of ventilators at motor vehicle assembly plants. Some car parts manufacturers are making ventilators at previously idled plants, the report said.
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