WASHINGTON – U.S. manufacturers cut back on production in April, as auto companies cranked out fewer cars, factories made fewer consumer goods and most other industries reduced output. The weakness suggests economic growth may be slowing.
The Federal Reserve said Wednesday that factory output dropped 0.4 percent in April, the third decline in four months. Production of autos and auto parts fell 1.3 percent in April. The drop is likely temporary because automakers are reporting stronger sales.
Still, the declines in April were broad-based. Factories produced fewer machines, electrical equipment, clothes, appliances, furniture and primary metals. Manufacturers made more computers and electronic products, among the few areas that showed gains.
Factories are making fewer goods in part because of a weaker global economy, which has reduced demand for U.S. exports. And exports are likely to stay sluggish because the recession of the 17 European Union countries that use the euro has extended into its sixth quarter.
American manufacturers are continuing to struggle in the face of subdued global demand, said Paul Dales, senior U.S. economist at Capital Economics.
Overall industrial production, which also includes output at utilities and mines, dropped 0.5 percent in April. Thats the biggest decline since August. Utility production plunged 3.7 percent, as power output returned to more normal levels after an unusually cold March.
A separate regional manufacturing report indicated that factory activity in the New York region shrank in May, signaling further weakness. The New York Federal Reserve Banks Empire State manufacturing survey fell to – 1.4 in May, down from 3.1 in April.
Still, there are signs that factory output could pick up later this year, particularly in the auto industry.