The U.S. manufacturing sector continues to post strong growth across multiple metrics even as many industries are facing severe challenges in meeting heightened demand. Today, we’re exploring the key manufacturing business conditions for the month, providing key takeaways from various reports on output, labor, new orders and optimism.
Manufacturing Output on the Rise
U.S. industrial output continued to advance in April, though at a slower rate than reported in March. The latest report from the Federal Reserve found that U.S. industrial production rose 0.7% in April, after climbing 1.4% in March.
Taken alone, manufacturing output rose 0.4% in April, after jumping 2.7% in March. Mining rose 0.7%, while utilities climbed 2.6%.
Looking at year-over-year data, industrial production has climbed 16.5% from April 2020 – the worst month of the pandemic for industrial companies. However, April’s output levels still sit 2.7% below pre-pandemic levels.
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Meanwhile, capacity utilization in manufacturing advanced 0.3% in April to a level of 74.1%.
Taking a closer look at the Fed’s manufacturing data, a 1.3% gain in non-durable goods offset a 0.4% decline in durable goods output.
On the durable goods side, motor vehicles and parts posted a sharp 4.3% decline in output as that sector continues to struggle with parts shortages. Losses were also seen in aerospace manufacturing and non-metallic mineral products. Durable goods output gains were seen in primary metals, electrical equipment and components and machinery.
On the non-durable goods side, strong positive readings were seen in chemicals, petroleum and coal products, and apparel/leather.
Taking a year-over-year look, motor vehicles and parts posted a triple-digit increase over April 2020 (+439%), while many other industries posted double digit year-over-year increases in output, led by apparel/leather; textile mills and machinery.
Hiring in Manufacturing Slows in April, Even as Unfilled Positions Rise
After a 2-month hiring spree, the U.S. manufacturing sector hit a wall in April, shedding 18,000 jobs. The drop in manufacturing employment came as a surprise given that job openings in the sector have hovered above the 500,000-job mark for several months in a row.
A closer look at the data finds that the motor vehicle and parts sector accounted for most of the job losses in April as component and supply shortages continue to plague that industry.
Transportation equipment manufacturing shed 28,000 jobs, while motor vehicles and parts lost 27,000.
By contrast, a number of other industries gained jobs in April, including miscellaneous manufacturing (+12,600) and machinery (+3,700). Meanwhile, chemicals, miscellaneous non-durable goods, apparel, and plastics/rubber all led a 2,000-job gain on the non-durable goods side.
A separate Labor Department report from April found that U.S. manufacturers have yet to fill more than a half million unfilled positions. The Job Openings and Labor Turnover Survey (JOLTS), issued April 11th, found that job openings in manufacturing continue to hover above the 500,000-job mark, with 528,000 unfilled positions reported in March.
Manufacturing Activity Continues Expansion
Meanwhile, the Institute for Supply Management reported that after hitting a 38-year high in March, U.S. manufacturing activity continues to expand, albeit at a slower rate. The ISM reported that U.S. manufacturing activity eased 4% in April to a level of 60.7%. This represents the sector’s eleventh straight month of expansion (any reading over 50 indicates expansion).
New orders continued to surge in April, with that reading coming in at 64.3% -- 3.7% lower than March. This represents the metric’s eleventh straight month of increased orders, with demand strongest in electrical equipment, appliances & components and textile mills.
Optimism among executives also reached a new high, with eleven optimistic comments reported for every one cautious comment.
According to the ISM, manufacturers expanded production at a slower rate compared to March, with that index easing 5.6% to a reading of 68.1%. Output advances were led by electrical components, miscellaneous manufacturing and fabricated metals.
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