Industrial production in the U.S. unexpectedly stalled in April, reflecting a drop in automobile output after supplies of parts were disrupted by the Japanese earthquake and tsunami.
Output at factories, mines and utilities was unchanged after a 0.7 percent gain in March, figures from the Federal Reserve showed today. Manufacturing fell 0.4 percent, while it rose 0.2 percent excluding automobiles. Economists had forecast a 0.4 percent gain in industrial production, according to the median estimate in a Bloomberg News survey.
Production of automobiles and parts dropped 8.9 percent in April, a decline that may be temporary as Japanese manufacturers recover from the March disaster. Rising demand from overseas and business investment are likely to further power sales at companies like Caterpillar Inc., one reason factories are at the forefront of the expansion.
“Manufacturing is still doing pretty well,” Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida, said before the report. “We’ve seen a pickup in exports. Production is still rebounding from the weak levels of the recession.”
Estimates of the 77 economists surveyed by Bloomberg ranged from an increase of 0.9 percent to a drop of 0.4 percent.
Factory output, which makes up 75 percent of the total, declined in April after rising a revised 0.6 percent in March.
Capacity utilization, which measures the amount of a plant that is in use, fell to 76.9 percent last month from 77 percent in March. The gauge compares with the average of 79.5 percent over the past 20 years.
Mining production, which includes oil drilling, increased 0.8 percent. Utility output climbed 1.7 percent.
Motor-vehicle assemblies dropped to 7.86 million units in April, the lowest this year, today’s report showed.
Consumer goods production fell 0.7 percent. Production of business equipment decreased 0.4 percent. Both declines reflected weakness in automotive products, the report said. Output of computers and electronic products rose 1.1 percent.
Manufacturing, which accounts for about 12 percent of the economy, is likely to keep bolstering economic growth as an 18 percent drop in the dollar index from June 7, 2010 to April 29 made American-made goods more attractive abroad.
Exports jumped 4.6 percent in March, the biggest gain since 1994, to a record $172.7 billion. The gain reflected overseas demand for autos, chemicals and industrial machinery. Sales to customers in South and Central America reached a record, and purchases from clients in the European Union were the strongest since June 2008.
Caterpillar, the world’s largest construction equipment maker, last month said it expects global economic growth this year of about 4 percent, with developing countries expanding by 6.5 percent and the U.S. growing by 3.5 percent.
The Peoria, Illinois-based company raised its full-year earnings forecast and said the outlook would have been higher had it not been for the March 11 earthquake in Japan.
“Our facilities in Japan were not damaged by the earthquake and tsunami, but many of our suppliers in Japan were,” Chief Executive Officer Doug Oberhelman said on an April 29 conference call. “As a result, we are experiencing sporadic production disruptions at many of our facilities around the world.”
© Copyright 2017 Bloomberg News. All rights reserved.