WASHINGTON (Reuters) – Manufacturing production in the US rose in April, driven by an increase in production at auto plants, but production remains constrained by higher interest rates.
Industrial production accelerated 1.0% last month, the Federal Reserve said Tuesday. Data for March was revised downwards to show factory production was down 0.8% from 0.5% previously reported.
Economists polled by Reuters had forecast output to rise 0.1%. Manufacturing fell 0.9% year-on-year in April.
Motor vehicle production rose 9.3% last month, after falling 1.9% in March. Excluding motor vehicles, industrial production recovered 0.4% after falling 0.7% in March.
Manufacturing, which accounts for 11.3% of the US economy, has been hampered by higher borrowing costs, which are undermining demand for goods typically purchased on credit. Expenditure is also shifting from goods to services.
Companies hold excess inventory as demand declines, reducing the incentive to place more orders with factories. There is also pressure from banks tightening lending conditions, which could make credit inaccessible to some small and medium-sized businesses and consumers.
The Institute for Supply Management’s measure of national manufacturing activity has declined for six straight months.
Production in the sustainable industry increased by 1.4% in April. Production of non-durable goods increased by 0.6%.
Mining production rose 0.6%, boosted by oil and gas exploration, after a 1.3% decline in March. Utilities output was down 3.1% after rising 8.4% in the previous month. Utilities production for electricity and natural gas fell in April.
Strong increases in manufacturing and mining offset the dip in utilities, driving overall industrial production up 0.5% in April. Industrial production remained unchanged in March.
Capacity utilization for the industrial sector, a measure of how fully companies are using their resources, rose from 79.4% in March to 79.7% and is equal to the average for 1972-2022.
Capacity utilization for the manufacturing industry increased by 0.7 percentage point to 78.3% in April. It is 0.1 percentage point above the long-term average.
(Reporting by Lucia Mutikani; editing by Chizu Nomiyama)