US factory output stalled in April

[WASHINGTON] Factory production stalled in April, as American manufacturers were dealt blows by a strong dollar and cheap oil.

The unchanged reading in manufacturing followed a 0.3 per cent March gain that was larger than previously estimated, a Federal Reserve report showed on Friday in Washington. Total industrial production declined for a fifth consecutive month amid mining and utilities cutbacks.

Soft export demand, caused by a stronger dollar and weaker global markets, continued to diminish US manufacturing activity in April, while oil companies curtailed operations to cope with low fuel prices. The effects of temporary setbacks in the first quarter, including bad weather and a West Coast port shutdown, will probably fade, signaling the industry could make some progress in coming months.

"Manufacturing activity has stabilized but is not rebounding significantly as of yet," Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit, said before the report. With calmer weather and a resolution of the port dispute, "we expect to see a modest improvement in the pace in the months ahead."

Total industrial production declined 0.3 per cent for a second month. Output in March was revised from a previously reported 0.6 per cent drop.

Mining production, which includes oil drilling, decreased 0.8 per cent in April, the fourth consecutive decline. Oil and gas well drilling dropped 14.5 per cent, according to the figures.

Utility output declined 1.3 per cent after plunging 5.4 per cent the previous month.

Automaking remained a bright spot. Output of motor vehicles and parts increased 1.3 per cent after rising 4.3 per cent a month earlier. Excluding autos and parts, factory production declined 0.1 per cent in April after climbing 0.1 per cent a month before.

Capacity utilization, which measures the amount of a plant that is in use, fell to 78.2 per cent last month from 78.6 per cent in March.

BLOOMBERG