The Federal Reserve’s new industrial production report today showed that U.S. domestic manufacturing in March took its first monthly tumble (0.38 percent) since August and its biggest since winter-affected February, 2015 (0.49 percent). Revisions (which incorporate the latest annual revision results released last month) were negative, and undercut the strong preliminary readings reported for January and February.
March’s manufacturing output fall-off was led by the biggest sequential plunge in constant dollar automotive output (2.96 percent) since May’s 3.19 percent decrease. As a result, the combined vehicles and parts industry, which has led U.S. manufacturing’s comeback during most of the current recovery, fell into a technical recession. It’s real production is now down by 0.38 percent since last February. Vehicle output was especially weak in March, plummeting by 4.77 percent for its worst month since last May’s 4.94 percent shrinkage in real terms.
March’s poor numbers mean that real U.S. domestic manufacturing output is now down on net since January, 2006 (by 0.38 percent), and is 4.43 percent below its all-time high, hit in December, 2007. The weak March automotive numbers helped drive monthly durable goods output down by its greatest percentage (0.83 percent) since January, 2014’s winter-affected 0.99 percent sequential contraction.
Here are the manufacturing highlights of the Federal Reserve’s new release on March industrial production:
>U.S. real manufacturing output dropped in March on month for the first time since last August, and the 0.38 sequential fall-off of 0.38 percent was industry’s biggest since February, 2015’s 0.49 percent – which was affected by unusually cold weather.
>Just as discouraging, the revisions (which incorporated the latest annual industrial production revision released by the Fed in late March) weakened initially reported combined January and February growth estimates that were industry’s best two-month stretch since February and March, 2014.
>January’s 0.54 percent monthly gain – which was upgraded in last month’s industrial production report – was revised down to 0.39 percent. February’s initially reported 0.51 percent sequential growth was downgraded to 0.35 percent growth.
>The overall March manufacturing monthly production fall-off was led by the worst figures for the automotive sector since last May.
>Real output in vehicles and parts combined – which has led manufacturing’s comeback since the current economic recovery began in mid-2009 – sank by 2.96 percent on month in March, the biggest such drop since last May’s 3.19 percent.
>The results were bad enough to plunge the sector into a technical recession. After-inflation automotive output is off by 0.38 percent since February, 2016.
>Automotive’s poor March owed mainly to a huge 4.77 percent decrease in inflation-adjusted vehicles production – the worst such figure since last May’s 4.94 percent.
>Another consequence of the overall real manufacturing production decline in March – industry’s constant-dollar output is now down on net (by 0.38 percent) since January, 2006.
>And since its pre-recession (all-time) peak, reached in December, 2007, price-adjusted domestic manufacturing output has now fallen by 4.43 percent.
>Overall real U.S. manufacturing output was up 0.98 percent on year in March – faster than its 0.12 percent inflation-adjusted output increase between the previous Marches.
>Automotive’s poor March performance helped lead to an after-inflation 0.83 percent monthly drop in manufacturing’s durable goods super-sector. That decrease was its first since August, and its biggest such shrinkage since winter-affected January, 2014 (0.99 percent).
>Year-on-year, inflation-adjusted durable goods output was up 1.45 percent. Between March, 2015 and March, 2016, if fell by 0.98 percent.
>Since its pre-recession peak, hit in December, 2007, durable goods production after inflation is down by 0.25 percent.
>Real production in the non-durable goods super-sector edged up by 0.13 percent on month in March – its third straight sequential increase.
>Year-on-year, non-durables’ price-adjusted production inched up by only 0.45 percent in March – much slower than its 1.37 percent advance between the previous Marches.
>Since its pre-recession peak – in July, 2007 – output in the non-durables super-sector has shrunk by 9.59 percent.