WASHINGTON – Production at US factories fell last month as a shortage of computer chips disrupted auto production.
Manufacturing output fell 0.1% in June – the third decline in five months, the Federal Reserve reported Thursday.
Overall, industrial production, including the output of factories, mines and utilities, rose 0.4% last month after increasing 0.7% in May. Industrial production is up 9.8% compared to the previous year.
Chip shortages led to a 6.6% drop in production of cars, trucks and auto parts in June. Excluding automobiles, industrial production rose 0.4% last month.
“The manufacturing sector continues to be hampered by supply constraints,” said Stephen Stanley, chief economist at Amherst Pierpont Securities. “The most publicized example is the struggle of automakers to deal with a shortage of chips. “
Utilities output rose 2.7% in June, as Americans stepped up air conditioning to combat a heat wave across much of the country. Mining production rose 1.4% on higher oil and gas production.
The US industry is booming as the coronavirus threat recedes, despite a shortage of workers and difficulties in getting supplies on time. The Institute for Supply Management, an association of purchasing managers, said its manufacturing edged down last month from May. But it still stood at 60.6 on a scale where anything above 50 signals growth. Yet factory hires have declined, according to the ISM, in large part because manufacturers struggle to fill vacancies as the economy rebounds at unexpected speed after the coronavirus recession.