Manufacturing Output Posts Largest Drop Since 1946; Here's Where the Losses Were

As the coronavirus pandemic continues to reshape the U.S. manufacturing sector, new data released by the Federal Reserve is among the first to illuminate the severity of its impact.

A report released April 17th by the Federal Reserve finds U.S. industrial output dropped precipitously in March, posting its largest decline since January 1946.

Industrial production declined 5.4%, according to the Fed, which included a 6.3% decline in manufacturing production – the sector’s largest decline since February 1946.

Utility output fell 3.9%, while mining declined 2.0%. Capacity utilization fell 4.3% and now stands at 72.7% -- 7.1% below it’s long-run average measured from 1972-2019.

All industries analyzed by the Fed reported production losses in March, with transportation equipment posting the largest losses, while food, electronics, paper and chemicals posted the smallest losses.

This article will take a closer look at the latest manufacturing output report and explore losses on an industry-by-industry basis.

Durable Goods Manufacturing Led March Losses

Durable goods manufacturing led production declines, with a 9.1% loss in output over the month.

Within the durable goods sector, motor vehicles and parts took the hit, with output in that sector declining by a whopping 28%.

Furniture & related products followed with a 10% decline, while fabricated metal products posted an 8.3% loss.

The remainder of the durable goods category declined in this order: aerospace and miscellaneous transportation equipment (-8.1%); nonmetallic mineral products (-6.6%); machinery (-5.6%); wood products (-4.2%); and primary metals (-2.8%).

Electrical equipment and computer & electronics, normally big gainers in output, posted the slightest losses, at 2.1% and 1.9%, respectively.

Non-Durable Goods Fare Comparatively Better

Non-durable goods manufacturing declined by a lesser degree in March, as demand for essential products such as food, paper products and cleaning supplies helped to offset losses.

Non-durable goods manufacturing fell by 3.2% according to the Fed, compared to durable goods’ 9.1% decline.

Leading losses in the non-durable goods category was the printing and related support activities industry, which posted a 18.2% decline, followed by apparel and leather manufacturing, down 16.5% and textiles and product mills, down 14.1%.

From there, losses eased somewhat, with plastics and rubber down 7.1% and petroleum products down 5.9%.

Industries currently producing essential products saw the slightest losses, with paper products down 2%; chemicals, down 1.7% and food processing, down 0.8%.

Mining Output Edges Down

Output in mining declined 2.0% in March, while utilities output fell 3.9%.

Year-over-year, however, mining output has posted no change, while utilities output has decreased 5.1% compared to March 2019.

March Losses Drag Down Year-Over-Year Output Readings -- With Some Exceptions

March’s precipitous declines in manufacturing output has dragged down year-over-year output numbers. Compared to March of 2019, durable goods manufacturing is 9.6% lower, while non-durable goods production is down 3.1%.

The one bright spot in year-over-year output is that some industries have posted a net gain--even with March’s historic declines factored in.

Compared to March 2019, computer and electronic products output is up 4.9%. Wood products output is up slightly at 0.9% compared to a year ago, while food, beverage and tobacco products are up 0.5%. Finally, production of paper products inched up 0.1% over last year.

Looking at the sharpest year-over-year losses in the non-durable goods category, the Fed saw apparel & leather fall 17.8%; textile and product mills decline 16.8% and printing/related support activities fall 16%.

Durable goods fared comparatively worse, with a 26.5% drop in motor vehicle production compared to this time last year, as well as a 18.5% drop in aerospace output and a 9.1% decline in machinery production.

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