Federal Reserve: Industrial production drops 5.4% in March
The U.S.’s industrial production levels plunged in March amid efforts aimed at curbing the spread of COVID-19.
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According to data released by the Federal Reserve on Wednesday, U.S. industrial production in March fell 5.4%.
Manufacturing output fell 6.3%, the Fed reported, noting “most major industries posted decreases, with the largest decline registered by motor vehicles and parts.”
As we noted last month, automakers announced they would suspend production at their North American plants. Ford Motor Co. announced March 31 it would further extend production suspensions past originally released target dates.
“Ford is delaying the restart of production at its North America plants to help protect its workers,” Ford said in a release March 31. “The company had been aiming to restart production April 6 at Hermosillo Assembly Plant and April 14 at several key U.S. plants – and now has further postponed startup dates, which will be announced later.”
According to the Fed, the decreases for total industrial production and for manufacturing were their largest since January 1946 and February 1946, respectively.
Drilling down further, the indexes for utilities and mining fell 3.9% and 2.0%, respectively.
Further illustrating the slowdown amid the coronavirus outbreak, the industrial sector’s capacity utilization for the industrial sector fell by 4.3 percentage points to 72.7% in March. The March capacity utilization rate is 7.1 percentage points below its long-run average (i.e., from 1972–2019).
“In March, the index for durable manufacturing fell 9.1 percent; the most sizable decline among its components was in motor vehicles and parts, where output fell 28.0 percent,” the report continued. “Durable goods industries that recorded decreases of between 8 percent and 10 percent included fabricated metal products, aerospace and miscellaneous transportation equipment, furniture and related products, and miscellaneous manufacturing.”
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Manufacturers expressed concern about COVID-19 even before many states began ramping up efforts to curb its spread, including shelter-in-place orders.
In a survey conducted by the National Association of Manufacturers from Feb. 28 t0 March 9, 78.3% of respondents said the COVID-19 pandemic would likely have a financial impact on their businesses.
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