Factory shutdowns near WWII demobilization levels in US
April 15, 2020 by Paul Wiseman, The Associated Press
WASHINGTON – American industry collapsed in March as the pandemic wreaked havoc on the U.S. economy.
Manufacturing and overall industrial production posted the biggest declines since the United States demobilized after World War II.
The Federal Reserve reported Wednesday that manufacturing output dropped 6.3 per cent last month, led by plunging production at auto factories that have entirely shut down.
Overall, industrial production, which includes factories, utilities and mines, plummeted 5.4 per cent. The declines were the biggest since 1946 and far worse than what economists had expected.
Production of autos and auto parts went into freefall, dropping 28 per cent.
The lockdowns and travel restrictions imposed to combat COVID-19 have brought economic activity to a near-standstill. Output dropped 3.9 per cent at utilities and two per cent at mines as oil and gas drilling plunged, the Fed said.
Factories were running at 70.2 per cent of capacity last month, down from 75.1 per cent in February and lowest since 2010 when the U.S. economy was still recovering from the 2007-2009 Great Recession.
“The outlook is bleak for the industrial sectors,” James Watson and Gregory Daco at Oxford Economics wrote in a research note.
“With the global coronavirus recession leading to a sudden stop in activity at home and around the world, factory output is likely to fall even further in April. Major supply chain disruptions, reduced energy activity and tighter financial conditions will continue to represent major headwinds in the coming months.”
They say industrial production could drop 15 per cent overall.
In another sign that industry is in a full-scale retreat, the Federal Reserve Bank of New York’s index for manufacturing in New York state plummeted an unprecedented 57 points this month to -78.2, lowest lowest level in records dating back to 2001.