US industrial output falls 5.4 per cent in March as virus strikes: Fed

[WASHINGTON] US industrial production fell 5.4 per cent in March as the coronavirus pandemic forced factories to close their doors and workers to stay home, the Federal Reserve said Wednesday.

It was largest decline since 1946, reflecting the economic devastation wrought by the disease, which has caused businesses to shed some 17 million jobs since mid-March as the pandemic curtailed consumer spending and paralyzed the world's largest economy.

Manufacturing output dropped 6.3 per cent, also the biggest fall in more than seven decades, which was felt across most industries but particularly pronounced in motor vehicles and parts which plunged 28 per cent, according to the report.

The pandemic is another blow to American manufacturing which was in recession for most of last year, battered by a multi-front trade war waged by President Donald Trump.

Total industrial output is 5.5 per cent below March 2019 while manufacturing production is down 7.6 per cent from a year ago, but analysts expect more bad news to come.

"The outlook is bleak for the industrial sectors," Gregory Daco of Oxford Economics said in an analysis, which predicted further declines in April's data.

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"Major supply chain disruptions, reduced energy activity and tighter financial conditions will continue to represent major headwinds in the coming months."

Smaller declines were reported in nondurable goods, which fell by only 3.2 per cent with decreases of two per cent or less in food and beverage, paper and chemicals - many of which were coveted as consumers opted to stay indoors.

Utilities output fell 3.9 per cent and mining output dropped 2.0 per cent, including a sizable drop in oil drilling, while capacity utilisation fell to 72.7 per cent from 77 per cent in February.

AFP