US factory output falls the most since 1946 as the coronavirus lockdown halts activity
Manufacturing output fell 6.3% in March, following a 0.1% decline in February, the Federal Reserve said in a Wednesday report.
Total industrial production also fell 5.4% in March. Both figures posted their largest declines this month since 1946.
"The collapse in manufacturing output was much bigger than the 3.5% drops in September and December 2008, the worst months of the Great Recession," Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a Wednesday note.
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US factory output slumped in March by the most since 1946 as manufacturing activity was halted by the coronavirus lockdown.
Manufacturing output fell 6.3% in March, following a 0.1% decline in February, the Federal Reserve said in a Wednesday report. Total industrial production fell 5.4% in March. Both figures posted their largest declines this month since 1946.
"We and the consensus had expected downbeat manufacturing data to be released today in the March IP report and the April Empire State survey and the actual figures came out below expectations," Daniel Silver of JPMorgan wrote in a Wednesday note. "These reports suggest that activity weakened considerably late in March and early in April."
The decline was led by motor vehicle output, which slid 28% in March, according to the report. Utilities fell 3.9% while mining output slumped 2% in the month. Across market groups, all recorded declines in March, the report showed.
Industrial capacity utilization fell to 72.7% in March, a rate that is now 7.1 percentage points below the long-run average, calculated from 1972 to 2019.
There could be worse to come before the US economy reopens, Ian Shepherdson, chief economist at Pantheon Macroeconomics wrote in a Wednesday note.
"The collapse in manufacturing output was much bigger than the 3.5% drops in September and December 2008, the worst months of the Great Recession," he said.
The coronavirus pandemic has hit the manufacturing sector hard, especially as the lockdown led to closures of nonessential businesses, including factories. The Fed noted in the Wednesday report that the "pandemic led many factories to suspend operations late in the month."
The Fed altered the way it collected data for the March report because of the coronavirus outbreak, it said. Researchers incorporated stay-at-home orders into the March data, as well as other information on industrial activity for late in the month, according to the report.
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