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Data released on Wednesday, showed industrial production dropped in March 5.4% affected by temporary lockdowns. Analysts at Wells Fargo, point out that not since the post-WWII demobilization from wartime to peacetime in 1946 has there been an output decline like this. 

Key Quotes: 

“Today’s report affirms that weakness as manufacturing output plunged 6.3%. As was the case with the headline decline, it also was the biggest drop since 1946. The drop in factory output had a lot to do with a 28% decline in motor vehicle production. That had been telegraphed in recent weeks amid the much-publicized shut down of auto plants.”

“Elsewhere declines were milder but still broadly based with every major category posting declines. Our concern here is that many of these factories were shut down just in the last few weeks of the month.

“We lost 18K manufacturing jobs in March, but the worst of the jobs impact is still coming as recent record-shattering jobless claims figures affirm. The employment component of the ISM also touched a level not seen since 2009, coming in at 43.8.”

“While we do expect consumer spending to turn swiftly when the country reopens, we suspect that capital expenditures will be slower to rise and the manufacturing sector may take much longer to fully recover, not unlike the experience of the past couple cycles.”