Following strong first-quarter growth, overall U.S. industrial production remained unchanged in April, although certain indicators such as manufacturing posted declines.

Industrial production in the United States remained relatively unchanged in April, following a downwardly revised 0.7 percent increase in March, according to the U.S. Federal Reserve‘s latest industrial sector report. Although overall production neither expanded nor declined last month, key industry segments suffered losses, raising concerns about the strength of the recovery in output.

The Fed’s report, released today, indicates that much of April’s weak performance resulted from a drop in manufacturing production, which constitutes the largest portion of overall industrial output. Following nine consecutive months of growth, manufacturing production fell 0.4 percent in April, largely due to a decline in motor vehicle output from 9 million units in March to 7.9 million units in April.

The Fed attributes the slowdown in automotive production to parts shortages and other supply disruptions caused by the recent disasters in Japan. Excluding motor vehicles and parts, factory output actually rose 0.2 percent in April. Despite the monthly decline, manufacturing production in April was 4.6 percent higher than in the same month last year.

“Economists expect only temporary supply disruptions, which are affecting automakers and other U.S. companies. They also noted that U.S. companies are likely to benefit once the Japanese rebuilding effort is under way,” the Associated Press reports. “That’s because the U.S. companies are likely to fill orders typically placed with Japanese companies, until those companies are able to resume more normal operations, economists said.”

Utilities output increased last month, rising 1.7 percent following a 0.7 percent gain in March, while mining production grew 0.8 percent following a 1.4 percent increase in March. Utilities output was up 8 percent year-over-year and mining output was up 4.1 percent from April 2010.

At 93.1 percent of its 2007 average, total industrial production was 5 percent above its prior-year level in April.

The lack of month-to-month growth in April was unexpected, as economists polled by MarketWatch had forecast a 0.3 percent gain.

The steepest production losses last month were in the durable goods index, which overall fell 1 percent, led by automotive products output, which dropped 8.9 percent following a 3.6 percent increase in March. Major losses were also recorded for primary metals; electrical equipment, appliances, and components; and furniture and related products. The production of nondurables edged up 0.1 percent in April after advancing 0.5 percent in March.

The index for consumer goods decreased 0.7 percent in April due to weak output in consumer durable goods, which fell 4.4 percent. Consumer nondurables, however, rose 0.3 percent. Non-energy, nondurable goods output increased 0.6 percent with gains in all major product groups, while the output of consumer energy products declined 0.5 percent.

Business equipment production fell 0.4 percent in April, following a 0.5 percent decrease in March. Transit equipment output suffered the largest decline in this category, dropping 3.6 percent, while the index for industrial equipment rose 0.7 percent. Despite the month-to-month decline in April, business equipment output remained 9.9 percent above the April 2010 level.

Meanwhile, capacity utilization, a measure of how much of the industrial sector’s production capabilities are being used, dropped to 76.9 percent, down 0.1 percentage point from March and 3.5 percentage points below the 1972-2010 average. Capacity utilization for manufacturing dropped 0.4 percentage points to 74.4 percent in April.

“The manufacturing sector was on a torrid pace in the first quarter, growing at a 7 percent annual rate compared to 1.8 percent overall economic growth (GDP),” Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI, wrote in an analysis of the Fed report. “The Manufacturers Alliance/MAPI expects manufacturing production to continue to outpace GDP, but by a narrower margin, for the rest of the year. Consumers have pent up demand for big ticket durable goods, businesses need to replace and upgrade equipment, and exports from U.S. factories are very competitive in world markets. The April decline in manufacturing production is a temporary setback that can be recouped later in the year.”

Earlier

Industrial Production Increases in First Quarter

Industrial Production Inches Downward in February

Resources

Industrial Production and Capacity Utilization
U.S. Federal Reserve, May 17, 2011

Factory Output Dropped on Japan Supply Disruptions
The Associated Press, May 17, 2011

U.S. Industrial Output Flat, Hurt by Japan Quake
MarketWatch, May 17, 2011

…Analysis on Industrial Production: Tsunami Effect Leads to ‘Temporary Setback’
by Daniel J. Meckstroth
Manufacturers Alliance/MAPI, May 17, 2011