Total industrial production in the United States fell 11.2% in April from a month earlier, according to numbers released Friday by the Federal Reserve. That decline is the largest monthly drop in the 101-year history of the industrial production index, reflecting the impact of the COVID-19 pandemic forcing many factories and businesses to a standstill following government-backed closures to slow the spread of the coronavirus.
Market expectations had called for an 11.5% decline. Manufacturing output dropped 13.7% from March to April, its largest decline on record, as all major industries posted decreases. The output of motor vehicles and parts fell more than 70%, according to the Fed, and production elsewhere in manufacturing dropped 10.3%. The indices for utilities and mining decreased 0.9% and 6.1%, respectively.
Because of COVID-19, many manufacturers have had to slow or suspend operations, and this has forced them to become agile and move in ways that would previously have been thought impossible. As manufacturers begin to rethink their approaches to their global supply chains and their overall international footprint, they will need to create a new view focused on minimizing future supply shocks while increasing the resiliency of their supply chains.
This pandemic continues to disrupt manufacturing and global supply chains, with consequences for businesses, consumers and the global economy that are not fully clear. Manufacturers should leverage the momentum they recently created to reevaluate their investments in technology to increase the visibility of supply chains, including engaging in more robust scenario planning, as well as a dynamic risk management system.
