The COVID-19 has taken a dramatic toll on U.S. manufacturing as production has dropped to its lowest level since World War II, according to a new report by the Federal Reserve Board.
Total industrial production fell 5.4 percent in March compared to the same month last year, as the coronavirus pandemic has forced factories, especially automakers, to suspend operations, the Fed’s report revealed.
“The decreases for total industrial production and for manufacturing were their largest since January 1946 and February 1946, respectively,” the Fed said on Wednesday (April 15).
Among the market sectors, motor vehicles and parts saw the biggest year-over-year decline at 27.2 percent; transit equipment production fell 22.8 percent as car and jet makers shut down; consumer durables followed a drop of 18.9 percent; production of business equipment decreased 8.6 percent; consumer goods slipped by 5.9 percent; and consumer energy nondurables were hit with a 5.3 percent dip.
The Fed said that plummeting production stems from an effort by states to protect the public against the spread of COVID-19.
A large number of states and localities issued stay-at-home orders directing nonessential businesses to suspend most operations, the report said. “Most of these orders were introduced in the second half of March, but at different times in different jurisdictions," researchers wrote.
The suspension of production had a widespread negative effect on industrial production for the month. “The magnitude of the effect of the COVID-19 pandemic on industrial output was estimated using procedures comparable to those used to assess the effects on production of significant weather events, such as Hurricanes Sandy and Katrina,” the Federal Reserve said.
One analyst told the Financial Times that there was no good news in the survey.
“There isn't any way to sugar-coat the data this month. Simply put, the report is terribly discouraging,” analysts said.