Factory output in the US dropped by 0.1pc in June after picking up 0.9pc in May. The decline could be attributed to lowered automobiles production due to an unrelenting global shortage of semiconductors, according to a Fed report.

 

Manufacturing, which contributes to 11.9pc of the US economy is being propped up by firm fiscal stimulus, lower interest rates, and continued demand for goods.

 

An increase in demand is straining the supply chain as manufacturers continue to work with a shortage of raw materials due to the ongoing chip crunch and COVID-19 restrictions. Auto production declined by 6.6pc last month. Demand for used cars and trucks has exponentially increased as automakers cut production, media reports suggest.

 

The production of motor vehicles and parts contracted at a 22.5pc rate in Q2, manufacturing output increased by 0.4pc in June. Although there was a decline in total manufacturing output, mining output rose 1.4pc, and utilities increased 2.7pc.

 

Industrial output grew at a rate of 5.5pc in the April-June quarter after increasing at a pace of 3.6pc in Q1.

The manufacturing sector saw a decline of 0.1pc decline in capacity utilization in June to 75.3pc. The overall capacity of the industrial sector declined by 0.3pc to settle at 75.4pc. 

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