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.
Paul Ashworth Chief North America Economist
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US Data Response

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The further small decline in the ISM manufacturing index in July probably has more to do with the continued drag from supply constraints than waning demand. The details did at least suggest that supplier delivery times and the accompanying upward pressure on prices may have peaked. But we suspect it will be a long time before supply constraints ease meaningfully.

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