US industrial production weaker than expected in April

Industrial production was steady last month, cooling from a revised 0.1 percent uptick in March, the Fed said in a report.

Analysts have been looking towards a gradual recovery in the manufacturing sector, but the latest report did not provide such reassurances.

Manufacturing output dropped 0.3 percent from the month prior, reversing two earlier months of growth, the Fed said.

In particular, the sector was bogged down by noticeable declines in the indexes for motor vehicles and parts and electrical equipment and appliances.

Output in mining fell by 0.6 percent, while that of utilities rose 2.8 percent.The manufacturing sector has been squeezed by rapid interest rate hikes by the Fed in recent years, with the US central bank holding rates at a high level now to combat inflation.Compared with April 2023, overall factory output was 0.4 percent lower, according to the latest data.

“The manufacturing sector continues to face headwinds from higher borrowing costs and tighter credit conditions,” said High Frequency Economics chief US economist Rubeela Farooqi.

She added that a delay in rate cuts will likely weigh on factory activity in the near-term.

“However, an eventual reduction in interest rates as well as an onshoring of supply networks should provide some support to factory activity over time,” she said in a note.