NEW YORK: A sharp rebound in automotive output in March spurred a third straight monthly gain in US factory activity, perhaps signalling the worst of the production woes that have dogged the motor vehicle industry over the last year may have passed.
Overall industrial production increased 0.9% last month, keeping pace with February’s upwardly revised pace, the Federal Reserve said. Economists polled by Reuters had forecast factory production accelerating 0.4%. Output jumped 5.5% from a year earlier.
Manufacturing, which accounts for 11.9% of the American economy, has benefited from a shift in spending to goods from services during the Covid-19 pandemic. But manufacturers have struggled to cope with the strong demand while labour markets have become extraordinarily tight and supply bottlenecks have persisted due to Covid lockdowns in China and the war in Ukraine.
Especially hard hit by supply issues has been the automotive sector, where production has been hampered for more than a year by a global shortage of electronic components, especially the computer chips needed for today’s increasingly complex vehicle operating systems. But US motor vehicle and parts production shot up by 7.8% last month, the largest increase since October, after a downwardly revised drop of 4.6% in February.
Total assemblies of cars and light trucks rose to nearly 9.5 million vehicles at a seasonally adjusted annual rate, the highest since January 2021, up from 8.3 million the month before.“The auto industry is making a comeback,” Bill Adams, chief economist for Comerica Bank, said in a note.
“Production plunged in 2021 as the chip shortage idled factories. Now that is reversing as carmakers work through the challenge and find ways to stretch their chip supplies.” —Reuters
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