Industrial output falls 0.1% unexpectedly amid supply issues

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US industrial output fell 0.1% in December, the first drop since September, with weakness in factory output indicating that manufacturers are still struggling with supply chains

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WASHINGTON – US industrial output fell 0.1% in December, the first drop since September, with manufacturers still struggling with poor supply chains.

Many economists had expected a slight increase in output last month as factories recovered.

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Yet manufacturing output actually declined 0.3%, with production at auto plants down 1.3%. Automakers have been hurt by supply chain problems, especially shortages of critical computer chips.

Production from utilities fell 1.5% last month, reflecting unusually warm December weather. Production from mining, which includes oil and gas production, was the only major category, showing a growth of 2% last month.

Economists believe that as long as problems affecting the supply chain persist, industrial production will continue to struggle to meet strong demand. There are concerns that an increase in COVID-19 cases due to the Omicron variant will lead to a shortage of factory workers, which could intensify supply chain problems.

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