U.S. factory output dips 0.1% in June on auto chip shortage

By Paul Wiseman

WASHINGTON (AP) – U.S. factory output slid last month as a shortage of computer chips disrupted auto production.

Manufacturing production dipped 0.1% in June – third drop in five months, the Federal Reserve reported Thursday.

Overall, industrial production – including output at factories, mines and utilities – rose 0.4 per cent last month after increasing 0.7 per cent in May. Industrial output is up 9.8 per cent from a year earlier.

The chip shortage pushed production of cars, trucks and auto parts down 6.6 per cent in June. Excluding autos, industrial production rose 0.4 per cent last month.

“The manufacturing sector continues to be hobbled by supply constraints,” said Stephen Stanley, chief economist at Amherst Pierpont Securities. “The highest profile example is the struggle by automakers to manage through a chip shortage.”

Utility output climbed 2.7 per cent in June as Americans cranked up the air conditioning to battle a heat wave across much of the country. Mining output rose 1.4 per cent on an uptick in oil and gas production.

American industry has been bustling as the coronavirus threat recedes, despite a shortage of workers and trouble getting supplies in time.

The Institute for Supply Management, an association of purchasing managers, reported that its manufacturing ticked slightly lower last month compared to May. But it still came in at 60.6 on a scale where anything above 50 signals growth.

Still, factory hiring shrank, ISM found, largely because manufacturers are struggling to fill job openings as the economy rebounds with unexpected speed from the coronavirus recession.