These Charts Show There's More to U.S. Factory Gains Than AutosBy
Consumer goods, business equipment rise most since 2014
Data bode well for manufacturing after years of malaise
America’s factories certainly put the hammer down in April. Production raced ahead by 1 percent, the most in three years, as plants across the manufacturing spectrum churned out more items.
A host of forces are combining to make the malaise over the last couple of years a distant memory: Leaner inventories (aside from automobiles), an improvement in the global economy, a pickup in corporate investment, a recovery in the oil patch and steady consumer spending.
These factors will keep U.S. manufacturers moving forward this year even as the nation’s automakers look like unlikely participants after recent robust gains.
Manufacturing climbed 1 percent in April, according to Federal Reserve figures released Tuesday. The advance was helped by a 5 percent surge in the output of motor vehicles and parts. Economists said auto production was merely stabilizing after a first-quarter slump. It’s also probably a pace that’s unlikely to endure as automakers contend with slower sales and full lots of unsold vehicles. “Motor vehicles as the engine of manufacturing growth is going to become past tense for most of the remainder of 2017,” Michael Montgomery, economist at IHS Markit, wrote in a note.
Details of the Fed’s industrial production report showed the April improvement extended beyond autos. Output of consumer goods rose the most since November 2014. Ditto for the production of business equipment. In fact, output excluding the auto industry rose the most in three years, a figure that bodes well for the durability of the manufacturing improvement.
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