Factory Output Dips 0.1% in June on Auto Chip Shortage

Nissan factory
Vehicles sit on the production line during final inspections at the Nissan Motor Co. manufacturing facility in Smyrna, Tenn. (Luke Sharrett/Bloomberg)

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WASHINGTON — U.S. factory output slid last month as a shortage of computer chips disrupted auto production.

Manufacturing production dipped 0.1% in June — the third drop in five months, the Federal Reserve reported July 15.

Overall, industrial production — including output at factories, mines and utilities — rose 0.4% last month after increasing 0.7% in May. Industrial output is up 9.8% from a year earlier.



The chip shortage pushed production of cars, trucks and auto parts down 6.6% in June.

“The manufacturing sector continues to be hobbled by supply constraints,’’ said Stephen Stanley, chief economist at Amherst Pierpont Securities. “The highest profile example is the struggle by automakers to manage through a chip shortage.’’

Utility output climbed 2.7% in June as Americans cranked up the air conditioning to battle a heat wave across much of the country. Mining output rose 1.4% on an uptick in oil and gas production.

American industry has been bustling as the coronavirus threat recedes, despite a shortage of workers and trouble getting supplies in time. The Institute for Supply Management, an association of purchasing managers, reported that its manufacturing ticked slightly lower last month compared with May.

Still, it came in at 60.6 on a scale in which anything above 50 signals growth. Factory hiring, though, shrank, largely because manufacturers are struggling to fill job openings as the economy rebounds.

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