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(Bloomberg) — US factory production declined in April for the first time in six months, marking a soft start to the second quarter for manufacturers encumbered by higher import duties.
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The 0.4% decrease in manufacturing production followed an upwardly revised 0.4% gain a month earlier, Federal Reserve data showed Thursday. Excluding autos, factory production fell 0.3% in April.
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Overall industrial production was unchanged. Output at utilities increased, while mining and energy extraction dropped.
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The retreat in manufacturing, which accounts for three-fourths of total industrial production, followed a healthy advance in the first quarter as many customers boosted orders before the brunt of President Donald Trump’s tariffs took effect. Recent months also included a ramp-up in the production of aircraft.
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At the same time, producers continue to face short-term headwinds, including higher costs for some materials and general uncertainty tied to Trump’s uneven implementation of his trade policy. While a number of businesses have announced longer-term plans for production facilities, many are also pausing investment plans until the US reaches bilateral trade deals and there’s more clarity on tax legislation.
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The decrease in April factory output reflected declining production of motor vehicles, computers and apparel, according to the Fed. Production of consumer goods, which includes cars, appliances and electronics, fell for a second month. Output of business equipment edged higher after a recent run of solid advances.
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A separate report Thursday showed growth in retail sales decelerated notably in April, reflecting consumers pulled back spending on cars, sporting goods and other categories of imported goods.
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Separate data illustrated an unexpected decline in prices paid to producers last month, largely reflecting a slump in margins.
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The Fed’s report showed capacity utilization at factories, a measure of potential output being used, fell to 76.8%. The overall industrial utilization rate was little changed.
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Meanwhile, surveys of manufacturers are showing weakness. An Institute for Supply Management gauge of factory activity remained in contraction territory as orders shrank and and prices accelerated amid the repercussions from tariffs.
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