Fed’s industrial production index posts largest drop in 101-year history

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The COVID-19 pandemic continues to wreak havoc on economic activity around the world.

That impact was particularly noticeable on the U.S. industrial sector last month.

According to the Federal Reserve, the industrial production index fell 11.2%, pushed by factory closures across multiple sectors in the U.S.

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Manufacturing output in April dropped 13.7%.

While the automotive sector is finally starting to ramp up again this week, automotive production was halted throughout the month of April. Motor vehicles output and parts fell more than 70%, according to the Fed.

Meanwhile, the utilities and mining indexes decreased by 0.9% and 6.1%, respectively.

The industrial sector’s capacity utilization rate fell by 8.3 percentage points to 64.9% in April, a rate which marked a decline of 14.9 percentage points from its long-run (1972–2019) average and 1.8 percentage points below its all-time (since 1967) low set in 2009, around the financial crisis.

Among market groups, the index for consumer goods fell 11.7%, while consumer durables fell 36.0%, consumer energy products fell 3.3% and consumer non-energy nondurables fell 6.2%.

“The weakness in consumer durables was led by a drop of 61.9 percent in automotive products, while the decline in consumer energy products reflected a decrease in fuels that was partly offset by an increase in sales by utilities to residences,” the Fed reported.

In addition, production of business equipment fell 17.3%, “held down by a drop of 60.3 percent in transit equipment that resulted from essentially month-long closures of most factories producing motor vehicles and civilian aircraft.”

The construction supplies and business supplies indexes declined by 12.6% and 9.9%, respectively.

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Materials output fell 9.9%, durables declined 17.2%, nondurables dropped 7.2% and energy fell 5.1%.

The next industrial production update from the Federal Reserve is scheduled to be released June 14.

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