Monday, May 18, 2020
American industry suffered the most severe plunge on record last month with factories, mines and utilities battered by the coronavirus pandemic.
The Federal Reserve said Friday that its industrial production index tumbled a record 11.2% in April. Manufacturing output also posted a record drop — 13.7% — as production of cars, trucks and auto parts plummeted more than 70%. Production of aerospace and other transportation products, metals and furniture fell around 20%. Output dropped 6.1% at mines and 0.9% at utilities.
The implosion of the U.S. industrial sector was not unexpected, but the scale of the collapse was stunning. Jennifer Lee, a senior economist at BMO Capital Markets, wrote “one can’t help but grimace."
Industry was running at 64.9% of capacity last month, shattering the previous record low set in the Great Recession year 2009. Factory capacity utilization also hit a record low 61.1%.
Manufacturing may get a boost over the coming week as auto plants begin to reopen.
“Auto output at the large factories is slated to resume on Monday,” said Stephen Stanley, chief economist at Amherst Pierpont Securities, “so we should see a pickup in manufacturing activity in May. ‘’
The lockdowns and travel restrictions imposed to combat COVID-19 have brought economic activity to a near-standstill. The United States lost nearly 21 million jobs last month, and unemployment surged to 14.7%, highest since the Great Depression.
U.S. gross domestic product — the broadest measure of economic output — is expected to crater at a 40% annual rate from April-June, biggest drop in records dating back to 1947.
The Commerce Department reported Friday that retail sales dropped a record 16% in April.
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