TLDR: Industrial production rose more than forecast in March after a February gain that was twice as big as previously estimated, indicating U.S. factories recovered after a weather-depressed start to the year.
Business activity growth slowed in March, according to the latest report from the Federal Reserve Board of Governors. Indeed, industrial production last month grew at 0.7 percent, better than expected but down from the prior month’s 1.2 percent expansion rate. Further, manufacturing activity grew by only 0.5 in March, the 4th expectations miss in the past 5 months and down sharply from the 1.4 percent jump in February. On the bright side, capacity utilization rose to 79.2 percent, the highest reading since June 2008, although this is still 0.9 percentage points below its average from 1972 to 2012 and below the pre-recession level of 80.8 percent in December 2007. However, even with the forecast disappointments this report suggests that the manufacturing sector continues to rebound from the modest dip in January. Bloomberg expands, “The figures follow recent data showing stronger retail sales and increasing employment that indicate the economy was gaining momentum as temperatures warmed. A pickup in corporate investment and further improvement in overseas markets would complement demand for motor vehicles and provide an additional boost for U.S. producers. “There’s a lot of pent-up demand among consumers and businesses, and factories have to produce those goods,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York, who correctly projected the gain in production. “The outlook for the manufacturing sector has brightened and will continue to do so.” Utility output rose 1 percent after a 0.3 percent drop the previous month. Mining production, which includes oil drilling, increased 1.5 percent last month. Business-equipment production advanced 0.5 percent after a 2 percent surge in February today’s Fed report showed. Output of construction materials rose 0.2 percent after rising 1 percent. Production of computers and electronic products also increased. Consumer goods production rose 0.7 percent, led by appliances, furniture and carpeting. The output of motor vehicles and parts decreased 0.8 percent after soaring 6.9 percent a month earlier, according to today’s report. Excluding autos and parts, industrial production increased 0.8 percent last month after a 0.9 percent gain…”
