Manufacturing output was unexpectedly flat in April due to lower oil and gas prices and the stronger dollar, the Federal Reserve announced Friday.
The median forecast in a Bloomberg survey of 21 economists called for a 0.2% increase.
“The manufacturing picture is really pretty flat,” 4Cast senior economist David Sloan told Bloomberg. As oil prices rebound and the negative effects of a West Coast port shutdown fade, manufacturing “will go from flat to modest growth, but I wouldn’t count on strong growth,” he said.
The stalled output followed a revised gain of 0.3% in March, according to the Fed. In April, the index for mining fell 0.8%, its fourth consecutive monthly decrease, while the output of utilities fell 1.3%.
“A sharp fall in oil and gas well drilling has more than accounted for the overall decline in mining this year,” the Fed explained.
Industrial production, meanwhile, dropped 0.3% in April for its fifth consecutive monthly loss, the Fed said. Bloomberg’s survey of economists on average projected that number to remain unchanged, with estimates ranging from a drop of 0.7% to a 0.8% gain. Output in March was revised from a previously reported 0.6% drop.
At 105.2% of its 2007 average, total industrial production in April was 1.9% above its year-earlier level, according to the Fed. Capacity utilization for the industrial sector decreased 0.4 percentage points in April to 78.2%, a rate that is 1.9 percentage points below its long-run average.
In another survey, the University of Michigan’s preliminary index of consumer sentiment dropped to 88.6 this month, the lowest since October, from 95.9 in April. The 7.3 percentage point decrease was the largest since December 2012.
“Confidence fell in early May as consumers became increasingly convinced that there would be no quick and robust rebound following the dismal first quarter — even if the under performance was exaggerated by inadequate seasonal adjustments,” said Richard Curtin, chief economist of UM’s Survey of Consumers.