Weak auto production
The weakness in motor vehicle output was a dampening factor for overall industrial activity in April.
May 16, 2024
April industrial production was flat, a touch below the consensus expectation for a slight gain of 0.1%. March production was revised lower to 0.1% from the originally reported 0.4%.
Manufacturing output fell 0.3% in April. One of the main areas of weakness was the production of motor vehicles and parts, which fell 2%. Consumers have been struggling under higher interest rates to purchase vehicles, even as prices fall and sellers sweeten their deals, as we noted in our writeup of retail sales data. The ebbs and flows of fluctuations in demand by buyers this year are forcing automakers to adjust their production schedules accordingly. The production of wood products fell 1.6%, machinery output declined 0.4% and fabricated metal products slipped 0.2%.
Information processing equipment output rose 0.5%. This sector has posted gains in every month this year as businesses spend on generative AI initiatives. Defense and space output increased 0.8% as military spending continues amid conflicts in eastern Europe and the Middle East.
The other two major components of industrial output were mixed in April. Utility output rose 2.8%. Mining output declined 0.6%.
Manufacturing leaders are less optimistic about growth prospects.
Ken Kim, KPMG Senior Economist
Bottom Line:
The weakness in motor vehicle output was a dampening factor for overall industrial activity in April. Excluding vehicles, industrial production edged up just 0.1%. On an annualized basis, industrial activity did not make much headway. April showed a 0.4% decline from a year ago. The recent manufacturing purchasing managers' index (PMI) showed the index slipping back into contractionary territory for April. That indicates manufacturing leaders are less optimistic about growth prospects than they were earlier this year.
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