By: Dr. Mike Campbell
It is often said that we live in a global village. Certainly, there is an undeniable inter-linkage within multi-national corporations and production and assembly facilities dotted around the world with there home base in a remote country. So it is perhaps unsurprising that a cataclysm in one major economic nation will produce knock-on effects in distant lands. The Japanese earthquake and tsunami is being blamed for the first downturn in US manufacturing output for ten months.
Figures just released in the USA show that US factory output fell last month by 0.4% on the March figure, reversing a ten month rally. The decline was largely led by the car making industry due to the shortage of parts from Japan which precluded completion of automobiles. Car production fell to 7.9 million units in April from 10 million the previous month. If the car data is stripped from the figures, the residual factory output nudged up by 0.2% over the previous months’ figure.
As a whole, US industrial output was 5% stronger in April than was the case twelve months earlier with mining and utilities sectors performing strongly. However, the housing sector continues to perform badly with new home construction down by 10.6% on the March figure. The seasonally adjusted figure for April for new home construction was 52,3000, representing a 25% fall on the comparable figure from last year. The poor housing data was attributed for a 1.3% decline in the Dow when the figures were released. With a glut of existing housing stock on the market (due in no small part to foreclosures) things look grim for the construction sector in the near term, at least.