The labor market holds, but manufacturing stumbles as war-driven energy costs reshape production

Factory production declined 0.1% in March after an upwardly revised 0.4% increase in February, breaking a nascent recovery in the manufacturing sector. Motor vehicle production fell 3.7%, while output of primary metals, machinery, and furniture and related products also declined. High-technology industry output rose 0.7%, recovering slightly from a 0.9% drop the prior month, but mining output dropped 1.2% as energy production fell 1.6%. Oil and gas well drilling decreased 2.4%. Utilities production dropped 2.3% as demand for heating waned. Overall industrial production fell 0.5% for the month, reversing February’s 0.7% gain. The dip comes as war-driven energy price spikes and policy uncertainty weigh on capital investment and hiring decisions. Initial jobless claims dropped 11,000 to 207,000 for the week ended April 11, signaling continued labor market stability, though continuing claims rose to 1.818 million. The unemployment rate for workers aged 20 to 24 stood at 6.4% in March, well above the overall rate of 4.3%. Industrial output rose 0.7% year-on-year in March and expanded at a 2.4% annualized rate in the first quarter.