US: No V-shaped recovery for industrial production – Wells Fargo

Data released on Friday showed industrial output in the US tumbled 11.2% in April.  In records that go back over a century, never before has industrial production posted a larger decline than it did in April amid widespread work stoppages at factories all over the country to stem the spread of COIVD-19, explained analysts at Wells Fargo.

Key Quotes: 

“Overall output plunged 11.2% in April, its largest monthly drop in records that date back 101 years. U.S. manufacturing has come a long way since 1919; that was the same year Edsel Ford became president of the Ford Motor Company, taking over the position from his father Henry. 

“Unlike the outlook for consumer spending, which we expect to snap back into positive territory in the third quarter, the outlook for manufacturing is not terribly bright. Even after a phased re-opening of the country is underway, the manufacturing sector will still be beset by delays from suppliers (which we are already seeing in the ISM report) as global supply chains are facing a test far worse than any previous economic slowdown or logjams created by a localized natural disaster.”

“The weak global economy and the low price environment for oil and other commodities suggest diminished interest in taking on new projects for the mining sector. For all these reasons we anticipate industrial production will remain in negative territory throughout the entire course of 2020 before gradually improving in 2021.”