US manufacturing production rises in April

[WASHINGTON] Output at US factories increased in April as operations at plants that were damaged by February's stormy weather in the South came back online, offsetting a decline in the production of motor vehicles.

Manufacturing production rose 0.4 per cent last month after surging 3.1 per centin March, the Federal Reserve said on Friday. Manufacturing production remains a touch below its pre-pandemic level.

"An important contributor to the gain in factory output was the return to operation of plants that were damaged by February's severe weather in the south central region of the country and had remained offline in March," the Fed said.

"The weather-induced drop in total industrial production in February and the subsequent rebound in March are now estimated to have been larger than reported last month." Economists polled by Reuters had forecast manufacturing output would increase 0.4 per cent in April.

Manufacturing, which accounts for 11.9 per cent of the US economy, is being underpinned by massive fiscal stimulus and a shift in demand to goods from services because of the coronavirus pandemic.

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

A global semiconductor crunch has forced automakers in the United States to slash production. Output at auto plants dropped 4.3 per cent in April. Excluding autos, manufacturing output rose 0.7 per cent.

The rise in manufacturing output combined with a 2.6 per cent increase in utilities to lift industrial production by 0.7 per cent last month. That followed a 2.4 per cent increase in March. Mining production gained 0.7 per cent.

Capacity utilisation for the manufacturing sector, a measure of how fully firms are using their resources, rose to 74.1 from 73.8 in March. Overall capacity use for the industrial sector was up 0.5 percentage point to 74.9 per cent. It is 4.7 percentage points below its 1972-2020 average.

Officials at the US central bank tend to look at capacity use measures for signals of how much "slack" remains in the economy - how far growth has room to run before it becomes inflationary.

REUTERS