Industrial Production (Apr.)

Manufacturing output increased by a modest 0.4% m/m in April but was held back by a 4.3% m/m drop back in motor vehicle production, as the global shortage of semiconductors really began to bite. Imports and domestic production of semiconductors both hit a record high last month, which suggests that particular shortage may become less acute in the coming months. Unfortunately, the shortages now extend well beyond just semiconductors, and include raw materials, other intermediate inputs and, based on the very elevated job openings rate for manufacturing, labour too. The upshot is that we expect those broader supply constraints to hold back the recovery in manufacturing output this year.