U.S. Industrial Production Rose 0.1% in February Despite Snow

Before you go, we thought you'd like these...
Before you go close icon
Output at U.S. factories, mines, and utilities rose 0.1% in February, the eighth straight monthly output gain in industrial production, and one that was likely held down somewhat by the snowstorms that hit the Northeast and Mid-Atlantic regions, the U.S. Federal Reserve announced Monday.

Meanwhile, the factory utilization rate, also known as capacity utilization, rose to 72.7% in February from 72.5% in January and 71.8% in December. The capacity utilization rate is now 7.9 percentage points below its average for 1972-2008, the Fed said -- still lower than it should be, but nevertheless better than the level recorded in January.

The consensus opinion of economists surveyed by Bloomberg News had been that industrial production would remain unchanged in February; it rose 0.9% in January and 0.5% in December. That same survey also predicted capacity utilization would dip to 72.4% in February.

More Than Just Inventory Replenishment

In February, U.S. industrial production registered a fairly broad-based gain. Materials production increased 0.3%, business equipment output rose 0.4%, materials increased 0.3%, and construction output increased 0.3%. Non-industrial supplies production was flat, and consumer production fell 0.4%, By industrial group: mining output surged 2.0% and utilities production rose 0.5%; meanwhile, manufacturing dipped 0.2%.

Although manufacturing accounts for less than 20% of U.S. GDP, it accounts for a considerable portion of the nation's cyclical growth. Continual declines in production point to a softening economy; rising, the reverse. A low capacity utilization rate usually reflects softer demand; a high rate, strong demand, with the potential for increased inflation.

February's industrial production data reveals a factory sector that's still humming along. Demand is solid, and while inventory rebuilding has contributed to the sector's rebound. But a demand trend this long (eight months) can not be attributed to inventory replenishing alone: It points to increasing commercial activity, with factories responding to the demand by increasing output. When viewed in combination with the Monday's report of a rising the Empire State Manufacturing Index, the picture this industrial production report paints is one of a factory sector that's gaining steam -- a bullish sign for U.S. GDP and corporate revenue and earnings.
Read Full Story

Sign up for Breaking News by AOL to get the latest breaking news alerts and updates delivered straight to your inbox.

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners