Reuters reported that U.S. manufacturing output witnesses largest drop since 1946. Manufacturing output dropped by the most in just over 74 years in March as the novel coronavirus pandemic fractured supply chains, suggesting business investment contracted further in the first quarter.
The Federal Reserve said on Wednesday manufacturing production plummeted 6.3% last month, the biggest decrease since February 1946. Data for February was revised down to show output at factories slipping 0.1% instead of edging up 0.1% as previously reported. Economists polled by Reuters had forecast manufacturing output dropping 3.2% in March.
The Fed said “the estimates in this release incorporated data on stay-at-home orders as well as other information on industrial activity for late in the month.”
Production at factories dropped at a 7.1% annualized rate in the first quarter, the sharpest since the first quarter of 2009, after decreasing at a 0.5% pace in the October-December period. Manufacturing, which accounts for 11% of the U.S. economy, was already struggling from the fallout of the Trump administration’s trade war with China well before the before the coronavirus hit U.S. shores.
Production at factories dropped at a 7.1% annualized rate in the first quarter, the sharpest since the first quarter of 2009, after decreasing at a 0.5% pace in the October-December period. Manufacturing, which accounts for 11% of the U.S. economy, was already struggling because of US trade war with China.
In addition to disrupting global supply chains, Lockdowns due to Coronavirus have also depressed demand for crude oil, undercutting spending by oil producers on drilling and shaft exploration equipment. Business investment has contracted for three straight quarters, the longest such stretch since the Great Recession.
Motor vehicles and parts production tumbled 28.0% last month. Business equipment output decreased 8.6%, held down by a 22.8% drop in transit equipment that reflected cutbacks in the output of both motor vehicles and civilian aircraft.
Production of construction supplies fell 5.8%, while business supplies output declined 6.7%. Oil and gas well drilling fell 1.3% last month.
