The numbers: Industrial production in April slumped 0.5%, the Federal Reserve announced Wednesday in a downbeat report that included downward revisions.
Capacity utilization fell sharply to 77.9% from an upwardly revised 78.8%.
Economists polled by MarketWatch expected a 0.1% drop for production and a decline in utilization fell to 78.6%.
What happened: Most major market groups reported worse production in April, the Fed said. There were drops in automotive, chemical products and consumer energy products.
Excluding autos, manufacturing production fell 0.3%.
The output of utilities fell 3.5% in April, as demand for heating decreased because of temperatures that were warmer than normal.
What they’re saying: “Manufacturers have without question borne the brunt of the negative impacts from the imposition of tariffs, the retaliation from China, and the uncertainty regarding the outlook for trade policy. Factories have also been hit by the strengthening in the dollar last year,” said Stephen Stanley, chief economist at Amherst Pierpont Securities.
“Today’s data on both IP and retailing lean the same way, towards a softer second-quarter growth rate that will essentially cancel out the upside surprise we saw in first-quarter GDP,” said Avery Shenfeld of CIBC Capital Markets.
Market reaction: The Dow Jones Industrial Average DJIA, -0.61% dropped Wednesday, with data on retail sales also being released and showing a 0.2% decline.
The yield on the benchmark 10-year Treasury TMUBMUSD10Y, -1.57% fell 4 basis points to 2.37%.