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aerospace, aircraft, aircraft parts, apparel, appliances, automotive, CCP Virus, coronavirus, COVID 19, electrical components, electrical equipment, Federal Reserve, industrial production, inflation-adjusted output, machinery, manufacturing, medical devices, medicines, miscellaneous transportation equipment, non-metallic mineral products, paper, petroleum and coal products, pharmaceuticals, plastics and rubber products, real growth, recession, semiconductors, stimulus, wood products, {What's Left of) Our Economy
Including some long-term “benchmark” revisions issued late last month, today’s Federal Reserve figures show that U.S. manufacturing output after inflation fell sequentially in March for the first time in three months.
The drop followed upgraded results for January and February, but even with those latest longer term revisions, the more important takeaway is that as of March now, price-adjusted manufacturing production (the measure used by the Fed, and the one that will be used in this release unless specified otherwise) was virtually unchanged over the past year.
And since February, 2020, just before the state-side arrival in force of the CCP Virus pandemic, industry has now grown by just 0.93 percent. Last month’s pre-benchmark Fed report pegged this increase at 1.65 percent.
For some longer term perspective, the new Fed statistics tell us that since peaking way back in December, 2007, American manufacturing production is down 5.98 percent. As of the last pre-benchmark release, this shrinkage was 5.30 percent. So domestic industry’s decade-and-half-plus slump has been slightly worse than previously estimated.
Back to the most recent numbers, only eight of the twenty biggest individual industry sectors tracked by the Fed expanded production on month in March. The biggest winners were:
>the very small apparel and leather goods industries, where production jumped sequentially in March by 1.96 percent. Although hammered and greatly diminished by decades of penny-wage foreign competition, output by these companies is now up 9.12 percent since just before America’s pandemic era began, versus the 8.02 percent calculable last month;
>petroleum and coal products, whose output expanded in March for a fourth straight month, and whose by 1.29 percent advance was the strongest since the 2.34 percent surge last September. Petroleum and coal products production is now 3.88 percent off its immediate pre-pandemic level, versus being 1.41 percent higher as of last month’s Fed release;
>paper manufacturing, which grew by 0.78 percent in March for its best monthly gain since November’s 1.64 percent increase. Since February, 2020, this sector has contracted by 6.33 percent – a big decrease but much better than the 13.69 percent plunge calculable last month;
>aerospace and miscellaneous transportation, where the March increase of 0.73 percent was the fist gain since last August. Production is now 6.84 percent higher than immediately prior to the pandemic’s state-side arrival in force, much lower than the 23.06 percent gain calculable last month; and
>plastics and rubber products, where production also improved by 0.73 percent in the sector’s best advance since February, 2022’s 2.67 percent burst. These sectors’ output moved to within 0.37 percent of it immediate pre-pandemic level, much closer than the 5.62 percent shortfall calculable last month.
The biggest losers of these big sectors were:
>wood products, which saw output plunge by 2.90 percent in March. And that wasn’t even its worst recent setback – that dubious honor goes to December’s 3.18 percent drop. These dismal results dragge wood products production down to 5.46 percent below its February, 2020 level, versus the 2.49 percent calculable last month;
>non-metallic mineral product, where production decreased for the first time in four months. But the 2.56 percent sequential retreat was the sector’s worst since the 4.01 percent crater in winter-affected 2021. Thanks to the rest of the benchmark revision, though, output of non-metallic mineral products is now actually up by 6.95 percent post-CCP Virus, versus the 2.67 percent calculable last month;
>electrical equipment, appliance, and component, a 1.71 percent production loser in its weakest monthly performance since November’s 2.83 percent tumble. Output in this diverse sector slipped to being up just 0.56 percent since immediately pre-pandemic-y February, 2020 versus the 4.32 gain calculable last month; and
>automotive, whose fortunes have been central to those of domestic manufacturing overall during these last challenging years. Its 1.48 percent March production drop was the greatest since last November as well (2.09 percent). This setbacks plus other benchmark revisions have pushed output of vehicles and parts down to 5.14 percent below February, 2020 levels. As of last month’s Fed release, they were 0.12 higher.
Output drooped in another manufacturing sector of unusual importance – machinery. Its products are used widely throughout the rest of industry and the economy that its production performance suggests whether the American corporate sector overall has decided to expand and modernize or whether its views the future more pessimistically.
Machinery’s March output dip of 0.68 percent, therefore, could be a negative indicator. At the same time, the decline was the first in three months – so maybe it’s a hiccup. Machinery production has now grown by 5.85 percet since the CCP Virus’ arrival in force state-side, slightly better than the 5.54 percent calculable last month.
Although President Biden has just declared the pandemic to be officially over, manufacturing sectors of special importance during this period fared well in March.
The global semiconductor industry that was plagued by shortages for so long now seems to be in full glut mode – except for the auto sector, whose chip supply reportedly is still spotty. Domestic output climbed 0.55 percent in March for its second straight monthly improvement. Slated to receive tens of billions of dollars worth of production subsidies from Washington going forward, semiconductor manufacturers have now raised their virus-era production by 8.05 percent since February, 2020 – a startling turnabout from the 7.83 percent decrease calculable last month.
Despite the pandemic’s steady fade over the last year, companies in medical equipment and supplies kept increasing production, and March’s advance of 0.43 percent was the third straight month of increases. Since the start of the pandemic era, their output has risen by 14.59 percent, versus the 10.52 percent calculable last month.
Production in pharmaceuticals and medicines – including vaccines – gained another 0.38 percent in March. Nonetheless, due to those benchmark revisions, its output is now estimated to be 13.38 percent greater than just before the pandemic’s arrival, down considerably from the 20.42 percent increase calculable last month.
Aircraft and aircraft parts companies kept benefiting from the post-pandemic rebound in travel, and turned out 0.35 percent more products in March than in February. But again, revisions resulted in a startling downgrade in post-February output figures – from the 30.19 percent increase calculable last month to just 7.87 percent.
What to expect going forward for manufacturing output? As discussed for the entire economy in my latest post on consumer inflation, gloomy for the short-term (as signs of an impending slowdown and even recession mount) but brighter longer term (mainly because politicians won’t be able to resist the temptation to keep voters happy by propping up their purchasing power – which should create more demand for manufactured goods, too).