WASHINGTON (CN) – Amid widespread closures aimed at slowing the spread of the coronavirus, U.S. manufacturing and industrial production in March posted the biggest declines since the aftermath of World War II, the Federal Reserve said Wednesday.
Total industrial production dropped by 5.4% last month, while manufacturing plummeted 6.3%, the largest single-month drops since January 1946 and February 1946, respectively, according to data released by the Federal Reserve.
While the data released on Wednesday showed across-the-board declines in nearly all major industries as factories shuttered in response to the pandemic, the auto industry led the way, with production dropping 28%. Output for furniture, textile and product mills, apparel and leather and printing and support also posted double-digit drops in March.
Overall, U.S. industry was operating at 72.7% capacity, falling more than four points from February and more than five points from this time last year.
Most widespread closures began in mid-March, as U.S. Covid-19 cases rose and testing capacity lagged. As of Wednesday, all but six states have issued some level of a stay-at-home order and all but eight have closed nonessential businesses, according to a tracker compiled by the American Enterprise Institute.
Experts cautioned both that there is some uncertainty in the current numbers, which could still be revised, and that the April numbers are likely to be even worse.
As part of the estimates built into the numbers, the Federal Reserve looked at how major storms like Hurricane Katrina impacted production in the areas they hit.
Andrew Butters, an assistant professor at the Indiana University Kelley School of Business, said the numbers are historic and in line with “depression-type” monthly declines in production.
He noted the timeline of how governments responded to the pandemic also means the March numbers in part capture a time before the shock of the outbreak really took hold.
“And so I think in terms of how you should maybe take this number and think about what you might expect going forward, I think the consensus of most economists and people that track these sorts of things is that the April number is going to be worse,” Butters said in an interview.
Robert Scott, a senior economist at the Economic Policy Institute, said the numbers released on Wednesday fit in with other indicators like unemployment claims and GDP projections to show the historic toll the pandemic has taken on the U.S. economy.
“I think it is all consistent with a view that we are now entering certainly the worse downturn since the Second World War and in some ways it is going to rival the Great Depression,” Scott said.
Scott noted, however, that better knowledge of how the government should respond to sharp economic downturns should help stave off some of the dramatic GDP contraction seen during the Great Depression.