US Industrial Production Drops More Than Expected On Weak Auto Output

Industrial production in the US slowed during the month of April, as the Federal Reserve's index tumbled 0.7 percent versus expectations of a milder 0.2 percent decline. Indeed, the news is in line with the softer regional manufacturing sector reports (Empire Manufacturing, Philly Fed, etc) we saw during the same period. A breakdown of the index shows that motor vehicle production was responsible for the bulk of the decline, as rocketing gasoline prices, deteriorating consumer confidence, and whithering disposible income lessens demand for autos. Meanwhile, general machinery and mining output also faltered. Overall, this industrial production report signals that domestic demand is taking a hit and is likely to continue weighing on economic expansion in the US throughout the year.

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