US manufacturing production surges in April on motor vehicles
PRODUCTION at US factories surged in April, driven by an increase in output at motor vehicle plants, but manufacturing continues to be constrained by higher interest rates.
Manufacturing output accelerated 1.0 per cent last month, the Federal Reserve said on Tuesday (May 16). Data for March was revised down to show production at factories declining 0.8 per cent instead of 0.5 per cent as previously reported.
Economists polled by Reuters had forecast production gaining 0.1 per cent. Output dropped 0.9 per cent on a year-on-year basis in April.
Motor vehicle production surged 9.3 per cent last month after declining 1.9 per cent in March. Excluding motor vehicles, manufacturing output rebounded 0.4 per cent after dropping 0.7 per cent in March.
Manufacturing, which accounts for 11.3 per cent of the US economy, has been hamstrung by higher borrowing costs, which are undercutting demand for goods, typically bought on credit. Spending is also shifting from goods to services.
Businesses are holding excess inventory as demand slows, reducing the incentive to place more orders with factories. Pressure is also seen from banks tightening lending standards, which could make credit inaccessible to some small- and medium-sized businesses as well as consumers.
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The Institute for Supply Management’s measure of national manufacturing activity has contracted for six straight months.
In April, durable manufacturing output rose 1.4 per cent. Output of nondurable goods advanced 0.6 per cent.
Mining output increased 0.6 per cent, boosted by oil and gas extraction, after slumping 1.3 per cent in March. Utilities production tumbled 3.1 per cent after jumping 8.4 per cent in the prior month. Production of electric and natural gas utilities declined in April.
The strong gains in manufacturing and mining offset the plunge in utilities, boosting overall industrial production by 0.5 per cent in April. Industrial output was unchanged in March.
Capacity utilisation for the industrial sector, a measure of how fully firms are using their resources, rose to 79.7 per cent from 79.4 per cent in March and is equal to its 1972-2022 average.
Capacity use for the manufacturing sector increased 0.7 percentage point to 78.3 per cent in April. It is 0.1 percentage point above its long-run average. REUTERS
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