By Xavier Fontdegloria

Industrial production in the U.S. expanded in April amid strong demand for goods, but the sector continued to be constrained by severe bottlenecks across the supply chain.

Industrial production, a measure of factory, mining and utility output, rose at a seasonally adjusted 0.7% in April compared with March, the Federal Reserve said Friday. This is broadly in line with forecasts from economists surveyed by The Wall Street Journal, who expected a 0.8% rise.

The reading marks a slowdown in industrial production's growth pace compared with March, when output rose by an upwardly revised 2.4%.

Manufacturing output--the biggest component of industrial production--increased by 0.4% in April from the prior month. Motor vehicle and parts production acted as a meaningful drag, falling by 4.3% on month, as the global shortage of semiconductor chips has led to many plants to run at less than full capacity.

Excluding the motor vehicle sector, factory output advanced 0.7%, primarily reflecting a further recovery in chemicals as additional factories that had sustained weather-related damage during February reopened, the Fed said.

"Elsewhere, industry results were mixed, with supply chain difficulties possibly hindering production," the report said.

The U.S. industrial sector's outlook is bright amid strong demand for goods due to the reopening of the economy and consumers' spending push, but supply shortages are restricting output and these strains aren't likely to fade soon, economists say.

Industrial production in April was 16.5% above the same month a year earlier, the data showed. The surge is partly due to the comparison with exceptionally low readings in April 2020, when the pandemic hit the country and factories closed. Production was 2.7% below its pre-pandemic levels.

Utilities output rose 2.6% in April after dropping substantially in March, when unseasonably warm weather reduced demand for heating. Mining output increased 0.7% in April, the Fed said.

Capacity utilization, which reflects how much industries are producing compared with what they could potentially produce, increased to 74.9% in April. Economists expected a 74.9% reading. Capacity utilization for manufacturing rose by 0.3 percentage point to 74.1%.

Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com

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(END) Dow Jones Newswires

May 14, 2021 09:45 ET (13:45 GMT)

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