US manufacturing output increases in April By Reuters

© Reuters. FILE PHOTO: Line workers spot weld frame parts on the flex line at the Nissan Motor Co auto manufacturing plant in Smyrna, Tennessee, US August 23, 2018. REUTERS / William DeShazer / File Photo

WASHINGTON (Reuters) – Production at U.S. factories increased in April, as operations at factories damaged by the February storm in the south of the country came back on line, offsetting a drop in motor vehicle production.

Manufacturing output rose 0.4% last month after jumping 3.1% in March, the Federal Reserve said on Friday. Manufacturing production remains a little below its pre-pandemic level.

“The return to operation of factories that were damaged by bad weather in February in the south-central region of the country and which had remained offline in March,” the Fed said.

“The decline in total industrial production due to weather conditions in February and the rebound that followed in March is now estimated to be larger than what was reported last month.

Economists polled by Reuters had forecast manufacturing output to rise 0.4% in April.

The manufacturing sector, which accounts for 11.9% of the US economy, is supported by a massive fiscal stimulus and a shift in demand towards goods from services due to the coronavirus pandemic.

But the surge in demand has led to a shortage of raw materials in the industry. The pandemic is also keeping some workers at home, adding to supply constraints.

A global semiconductor crisis has forced American automakers to cut production. Production at auto factories fell 4.3% in April. Excluding autos, manufacturing output increased 0.7%.

The increase in manufacturing output combined with a 2.6% increase in utilities to increase industrial production by 0.7% last month. This follows a 2.4% increase in March. Mining production advanced 0.7%.

The capacity utilization of the manufacturing sector, a measure of how well businesses are making full use of their resources, fell from 73.8 in March to 74.1. Overall capacity use in the industrial sector increased 0.5 percentage points to 74.9%. It is 4.7 percentage points below its 1972-2020 average.

U.S. central bank officials tend to look at capacity utilization metrics to indicate how much ‘slack’ remains in the economy – how far growth has leeway before it slows down. becomes inflationary.

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