US Manufacturing Output Falls in April on Weak Auto Production

• U.S. manufacturing production fell more than expected in April amid a sharp decline in motor vehicle output, and the sector could struggle to regain its footing in the second quarter because of tariffs.
• Factory output dropped 0.4% last month after an upwardly revised 0.4% gain in March, the Federal Reserve said on Thursday. Economists polled by Reuters had forecast production would slip 0.2% after a previously reported 0.3% rise.
• Production at factories increased 1.2% on a year-over-year basis in April. President Donald Trump's shifting tariffs policy poses a significant headwind to manufacturing, which accounts for 10.2% of the economy and relies heavily on imported raw materials.
• While the Trump administration slashed duties on Chinese imports last weekend to 30% from 145%, a 10% tariff on nearly all imports remained in place as did a 25% tax on steel and aluminum, as well as motor vehicles and parts.
• Manufacturing grew at a 4.8% rate in the first quarter after a prolonged slump due to higher interest rates. Motor vehicle and parts output plunged 1.9% last month after increasing in the prior two months, likely as automakers tried to stay ahead of tariffs. Durable manufacturing production fell 0.2%. Nondurable manufacturing production decreased 0.6%, with most industries posting declines. Mining output slipped 0.3% after posting strong gains in the previous two months. Utilities production rebounded 3.3%. That followed two straight monthly declines.
• Capacity utilisation for the industrial sector, a measure of how fully firms are using their resources, dipped to 77.7% from 77.8% in March. It is 1.9 percentage points below its 1972–2024 average.

(Source: Reuters)