Tags

, , , , , , , , , , , , , , , , ,

Sorry for the tardiness of this post on the latest official (April) figures for U.S. manufacturing output. Sometimes life gets in the way. But I hope you agree that they’re still worth reviewing because even without a stupendous performance by the automotive sector, they’d have still been solid.  And the more so with domestic-based industry and the entire economy either supposedly headed for recession or already in one.

These results don’t change the recent big-picture description of U.S.-based manufacturing production essentially flat-lining. But it hasn’t experienced a significant drop-off, either.

In fact, the April sequential growth of 1.02 percent in inflation-adjusted terms (what’s measured by these data tracked by the Federal Reserve and what will be used in this post unless otherwise specified) was the strongest since January’s 1.59 percent. And revisions were slightly positive.

And leaving aside the vehicle and parts sectors, April’s increase would have been a highly respectable 0.38 percent.

The April report shows that American manufacturers have now boosted their output by 1.20 percent since February, 2020, just before the state-side arrival in force of the CCP Virus pandemic As of last month, this figure was 0.93 percent.

The biggest April production winners among the broadest industry-specific manufacturing categories monitored by the Fed were:

>automotive, whose blazing 9.30 percent expansion not only was its best since October, 2021’s 10.44 percent but enabled the industry to achieve a new all-time production record. It topped December, 2018’s previous historic high by 1.89 percent.

Automotive output figures, though, can be volatile. Indeed, the strong April advance followed a downwardly revised March tumble of 1.93 percent that was the sector’s worst monthly performance since February, 2022’s 3.37 percent dive. So it’s still far from clear whether April represents a blip or the start of a lengthy upswing.

What is clear that, pending revisions, the April monthly jump pushed automotive production to 1.57 percent above its immediate pre-pandemic level, versus the 0.97 percent calculable last month;

>computer and electronics products, whose 2.15 percent April gain broke a weak spell of four months and stands as the sector’s best performance since its 2.62 percent advance in May, 2021. These industries have now grown by 1.57 percent since immediately pre-pandemic-y February, 2020, versus the 0.97 percent increase calculable last month. This rate seems modest, but computer and electronics products fell off only modestly during the deep CCP Virus-induced economy-wide downturn;

>plastics and rubber products, where production expanded by 1.16 percent in April for the sector’s second straight improvement after a long spell of weakness. In fact, the April results for plastics and rubber products makers was their strongest since February, 2022’s 2.67 percent. But due to some major downward revisions, these industries’ output sank from 0.37 percent below pre-pandemic levels to 2.01 percent below.;

>primary metals, which boosted production by 0.90 percent. But these industries have still shrunk by 2.71 percent during the pandemic era and it aftermath, versus the 2.90 percent calculable last month.

The biggest losers among these broad sectors were:

>miscellaneous durable goods, where output in April tumbled by 1.32 percent in the worst performance by this diverse group of industries since last December’s 1.79 decrease. Miscellaneous durable goods producers have still increased their production by 9.59 percent since February, 2020, but last month, growth during this period was 11.30 percent;

>apparel and leather goods, where production was cut by 0.80 percent, and post-February, 2020 growth was nearly halved – from the 9.12 percent calculable last month to 5.25 percent. Nonetheless, despite this progress, because of decades of penny-wage foreign competition, these sectors remained mere shadows of themselves:

>machinery, whose output decreased by 0.50 percent and extended a three-month losing streak. These results are discouraging because this diverse grouping is a bellwether for the rest of manufacturing and the economy overall, since its products are so widely used for expansion and modernization. Machinery’s poor recent performance has dragged its CCP Virus-era-and-beyond growth from the 5.85 percent calculable last month to 3.54 percent; and

>furniture and related products, whose -0.43 percent April output slip was its sixth retreat in the last seven months. These industries are now 12.43 percent smaller than in just before the CCP Virus’ arrival, versus the 11.49 percent calculable last month.

Manufacturing sectors of special importance since the pandemic began depressing and distorting the economy followed a solid March with a comparably good April.

The global semiconductor sector shortage that began during the virus period has now eased dramatically for most types of chips, and in that vein, it’s no surprise that U.S.-based producers increased output in April for the third straight month. The 2.08 percent improvement pushed the sector’s production 10.54 percent higher since February, 2020, versus the 8.05 percent calculable last month.

April production of pharmaceuticals and medicines – including vaccines – was strong, too, with the 1.06 percent rise representing the best performance since last December’s 1.08 percent. This sector is now 14.57 percent larger than in immediately pre-pandemic-y February, 2020, versus the 13.38 percent calculable last month.

Aircraft and aircraft parts companies boosted their production only fractionally in April, but this marginal gain broke a string of four straight decreases. Even so, a substantial downward March revision helped reduce these firms’ output growth since the pandemic’s arrival state side in force to 7.07 percent, versus the 7.87 percent calculable last month.

The only April loser among this group was the medical equipment and supplies industry. It’s 1.03 percent production drop was the worst since last December’s 1.57 percent, and dragged its virus-era-and-beyond growth from the 14.52 percent calculable last month to 13.02 percent.

With a U.S. recession still a prediction rather than a fact, the economy continuing to show at least decent momentum, and a growing likelihood that the Federal Reserve will pause its campaign of combating inflation with growth-slowing interest rate hikes, it’s difficult to be gloomy about domestic manufacturing’s near-term future. And if the nation’s politicians succumb to their usual election-year temptation to throw more money at businesses and consumers, then industry’s medium-term prospects look pretty good, too.

Of course, if that’s so, it means that inflation will stay high as well. And how long both developments will remain tolerable for businesses, consumers and all the consumers who vote, and the Fed with its inflation-fighting responsibilities, is anyone’s guess.

Advertisement