US industrial production tanks the most in 101 years amid factory lockdowns

• US industrial production plummeted in April by the most since data collection began in 1919.
• Total production fell 11.2%, and manufacturing output declined a record 13.7% "as all major industries posted decreases," the Federal Reserve said in a Friday release.
• Factory activity was one of the first economic areas to be hit by the coronavirus pandemic, as global supply chain disruptions slowed production.
• The pandemic "causes the gears of industrial activity to grind to a halt," Gregory Daco, chief US economist at Oxford Economics, said in a note, adding he doesn't expect a full recovery until late 2021.
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US industrial production slid in April by the most since data collection began in 1919 as coronavirus lockdowns slammed manufacturing activity.

Manufacturing output plunged a record 13.7% "as all major industries posted decreases," the Federal Reserve said in a Friday release. Economists surveyed by Bloomberg expected a 14.6% drop.

Total production dipped 11.2% after its 4.5% contraction in March. Automobile and auto parts manufacturing plummeted more than 70%, the biggest industry-group decline in the Fed's index.

Capacity utilization, a metric that tracks the amount of a factory being used, declined 8.3 percentage points to 64.9 last month. The rate sits 14.9 percentage points below its average from 1972 to 2019, and slightly below its last all-time low seen during the financial crisis.

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Even as the US pivots to economic reopening plans, factories are unlikely to see the smooth recovery hoped for in other sectors. Manufacturing activity declined relatively early in the pandemic's life, as supply chain disruptions slowed production before outbreaks cropped up in the US.

Weakened demand, lasting uncertainty, and fiscal tightening will delay a return to past levels of output by more than a year, Gregory Daco, chief US economist at Oxford Economics, said Friday.

"The coronavirus causes the gears of industrial activity to grind to a halt," he wrote in an emailed note. "We forecast that industrial output losses will not be recovered until late-2021."

The bleak industrial data joins several other reports detailing the economic damage sourced from the coronavirus pandemic. Weekly jobless claims reached 3 million last week, the Labor Department announced Thursday, bringing the metric's eight-week total to more than 36 million Americans.

Retail sales data released Friday showed a record 16.4% decline in consumer spending, trouncing the 12% drop expected by economists surveyed by Bloomberg. The reading nearly doubled March's then-record plunge of 8.3%.

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