Motor vehicles, AI boost US manufacturing production; supply shortages from war loom

By Lucia Mutikani

WASHINGTON, May 15 (Reuters) - U.S. mill accumulation posted its largest summation successful 14 months successful April, driven by centrifugal vehicles and request for exertion goods amid an artificial quality spending boom, but proviso disruptions from the warfare with Iran formed a shadiness implicit the manufacturing sector.

Those constraints were flagged by a survey from the ‌New York Federal Reserve connected Friday showing transportation show by suppliers successful New York authorities deteriorated successful May. The U.S.-Israeli struggle with Iran has disrupted shipping successful the Strait of ‌Hormuz, raising vigor prices, arsenic good arsenic straining planetary proviso chains and causing shortages of a wide scope of goods, including fertilizers, aluminum and user products.

Producer prices accrued astatine their fastest gait successful 4 years successful April. Oil prices jumped connected ​Friday aft comments from President Donald Trump and Iran's overseas curate dented hopes of a woody to extremity vessel attacks and seizures astir the Strait.

"Overall, firmer request and continued enlargement successful output constituent to immoderate resilience successful the manufacturing sector," said Michael Gapen, main economist astatine Morgan Stanley. "However, uncertainty astir proviso and prices leaves risks to the near-term outlook tilted to the downside."

Manufacturing output accrued 0.6% past month, the largest emergence since February 2025, aft an upwardly revised 0.1% summation successful March, the Federal Reserve said. Economists polled by Reuters had forecast accumulation astatine factories rebounding 0.2% aft a antecedently reported 0.1% dip successful March. Factory accumulation ‌advanced 1.3% connected a year-over-year ground successful April.

Motor conveyance and parts output ⁠jumped 3.7%. Production astatine high-technology industries accrued 1.0% aft rising 0.5% successful March. Output was boosted by computers and peripheral equipment, which accrued 1.5% for a 2nd consecutive month. Production of semiconductors and related physics components roseate 1.0% portion that of communications instrumentality accrued 0.6%.

Businesses are rapidly adopting AI, investing billions of dollars, ⁠and helping to prop up manufacturing, which accounts for 9.4% of the economy. AI spending contributed importantly to the economy's 2.0% annualized maturation gait successful the archetypal quarter.

Excluding high-technology industries and centrifugal vehicles, manufacturing roseate 0.3% successful April aft a akin summation successful March. Durable goods accumulation changeable up 1.2% past month.

But output of nondurable goods eased 0.1%, with chemicals falling 0.9%. Production of plastics and rubber products besides dropped 0.9%. Output of petroleum ​and ​coal products, however, accrued 1.0% for a 2nd consecutive month. Production besides roseate for food, beverage and baccy products.