The Federal Reserve’s new industrial production data showed that domestic U.S. manufacturing grew sequentially in April for the first time in two months, and therefore climbed out of its second technical recession in less than two years. Revisions for January, February, and March were on the whole slightly negative.
The April recovery was led by surges in the durable goods super-sector, and durables sectors automotive and machinery that still were still too weak to end any of the technical recessions for those industries. In fact, domestic manufacturing’s output in real terms is still more than four percent lower than at the Great Recession’s onset in late 2007 – making clear that, over the longer haul, this manufacturing slump still hasn’t ended.
Here are the manufacturing highlights of the Federal Reserve’s new release on April industrial production:
>With real output rising sequentially in April for the first time in two months, American domestic manufacturing ended its second technical recession in less than a year.
>Inflation-adjusted production increased by 0.33 percent on month in April, but revisions were generally negative. March’s originally reported 0.24 percent month-to-month decrease is now pegged at a 0.30 percent drop. February’s 0.16 percent decline was revised upward to a 0.09 percent dip. But January’s previously reported 0.44 percent increases was downgraded to a 0.39 percent improvement.
>The April manufacturing snapback was led by durable goods and in particular by two industries within that super-sector – automotive and machinery.
>Durable goods’ real April monthly output growth of 0.60 percent was its best such performance since last July, and its first sequential improvement since February. But its price-adjusted production levels are still below those of July – a nine-month span of cumulative contraction that qualifies technically as a recession.
>March sequential durables output was downgraded from a 0.37 percent decline to a 0.58 percent drop. February’s monthly 0.15 percent growth was revised up to 0.19 percent.
>Constant dollar production in automotive jumped by 1.28 percent in April, the best sequential performance since December. But the increase followed a sharp (though upwardly revised) 1.40 percent sequential falloff in March. Partly as a result, real automotive output – which for years had led manufacturing’s comeback from its deep dive during the Great Recession – still remains one percent below its peak in last July, another nine-month cumulative decline that qualifies as a technical recession.
>Real machinery production popped by 2.37 percent – its best sequential increase since December, 2011. But inflation-adjusted output in the sector is still below levels it hit in June, 2011.
>Year-on-year, durables output after inflation rose 0.54 percent in April – less than half the rate between the previous Aprils (1.17 percent). And durable goods production overall in constant dollar terms is still 0.80 percent below the levels it hit when the Great Recession began in December, 2007 – more than eight years ago.
>Despite the April recovery and the end of its technical recession, real overall manufacturing output is also up only 0.54 percent year-on-year. That’s much slower growth than its 1.46 percent after-inflation production increase between April, 2014 and April, 2015.
>The April results leave real manufacturing output 4.13 percent below its pre-recession peak.
>In contrast with a recent trend, April sequential growth in the non-durable goods super-sector lagged that of durable goods, increasing only fractionally. Nonetheless, this meager improvement was the super-sector’s second in a row.
>Indeed, March’s initially reported 0.08 percent month-on-month dip in real non-durable goods production is now judged to have been a 0.05 percent increase. But February’s previously reported fractional gain has been downgraded to a substantial 0.36 percent decrease.
>On a year-on-year basis, non-durables real output advanced by 0.54 percent – matching the performance of overall manufacturing and durable goods. But that growth is less than one third that recorded from April, 2014 to April, 2015 (1.82 percent).
>Yet because of even more sluggish performance earlier during the economic recovery, real output of non-durable goods is still 10.02 percent lower than at its pre-recession peak, in July, 2007.