Japan’s disaster is having a direct impact on the U.S. manufacturing sector and today’s data from the Fed on industrial production proves it.
There’s been a sharp decline in automobile production in the U.S., and that’s all about Japan.
From The Fed:
Total motor vehicle assemblies dropped from an annual rate of 9.0 million units in March to 7.9 million units in April, mainly because of parts shortages that resulted from the earthquake in Japan. Excluding motor vehicles and parts, factory production rose 0.2 per cent in April.
The production index for durable goods dropped 1.0 per cent in April. The output of motor vehicles and parts fell 8.9 per cent after increasing 3.6 per cent in March. In addition, in April, significant losses in output were recorded in the following industries: primary metals; electrical equipment, appliances, and components; and furniture and related products. Durable goods industries with gains in output included nonmetallic mineral products, fabricated metal products, machinery, computer and electronic products, and aerospace and miscellaneous transportation equipment.
That doesn’t mean that automakers are a bad long-term bet, however. Goldman Sachs analysts noted last month that while production problems were likely to persist in the short-term, the problem would dissipate over time. Essentially, it’s a supply side issue, not demand side, and there’s no reason to believe production won’t ramp up when the Japanese situation is resolved or improves.
Business Insider Emails & Alerts
Site highlights each day to your inbox.