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First Cut: April industrial production had largest one-month drop in series history

Industrial production fell 11.2% in April, its largest one-month decline, the Federal Reserve said. The April index reading of 92.9 is the lowest since 92.9 in April 2010 as manufacturing struggled to gain upward momentum after the December 2007-June 2009 recession. The Fed noted that the drop was due to the COVID-19 pandemic that necessitated slowed or suspended production in most industries. The readings are back into recessionary territory for manufacturing and utilities.

Manufacturing was down 13.7% in April as durables manufacturing fell 19.3% on widespread declines that were particularly acute with the 71.7% deceleration for motor vehicles and parts. Excluding motor vehicles and parts, manufacturing was down 10.3%. Overall production was down 8.6% excluding manufacturing.

Rapid reductions in prices and demand for energy brought the mining sector down 6.1% in April. Oil and gas well drilling sank 27.8% in April.

Utilities output was down 0.9% in April. Milder – but still cool – weather continued demand for heating in April that was reflected in a 10.7% rise in natural gas. However, overall cutbacks in activity led to a 3.3% decline in electricity production.

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