– May 15, 2020

Industrial production sank 11.2 percent in April, following a 4.5 percent drop in March. The April fall is the fourth drop in five months and the largest monthly decline on record. Over the past year, industrial production is down 15.0 percent and is at the lowest level since March 2010 (see chart). Total capacity utilization decreased 8.3 percentage points to 64.9 percent, the lowest on record since 1950 (see chart).

Manufacturing output, which accounts for about 75 percent of total industrial production, fell 13.7 percent after sinking 5.5 in March. Manufacturing output has been flat or down for four consecutive months, resulting in an 18.0 percent drop over the past year (see chart). Manufacturing utilization fell 9.7 percentage points to 61.1, also the lowest on record since 1950 (see chart). Manufacturing-sector weakness was widespread with every category showing a decline.

Mining output posted a 6.1 percent decline for the month while utilities output dropped 0.9 percent in April. Over the past year, mining output is down 7.5 percent while utilities output is down 3.8 percent.

Measured by market segment, consumer-goods production was down 11.7 percent in April, with consumer durables off 36.0 percent and consumer nondurables down 5.5 percent. Business-equipment production fell 17.3 percent in April while construction supplies decreased 12.6 percent for the month. Materials production (about 46 percent of output) decreased 9.9 percent for the month and is down 12.8 percent from a year ago.

The tsunami of disastrous economic data continues. Lockdowns have pummeled economic activity, the labor market, and consumer attitudes. While some areas are moving towards easing restrictions, much damage has been done to the economy. It will likely be a slower path back than there was going in.

Robert Hughes

Bob Hughes

Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals. Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.

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