March Industrial Production and Capacity Not Driven by Manufacturing

hauling logs
hauling logs

Industrial production and capacity utilization data have been released for the month of March. Production rose more than expected, with a gain of 0.4%, versus the Bloomberg consensus estimate of 0.2%. Capacity fell from 79.6% in February to 78.5% in March, but this was at least ahead of the Bloomberg consensus of 78.3%. Today's news also builds on the gain in housing starts, as well as a tame Consumer Price Index report, calming the persistent inflation fears.

We would also point out that February production was raised to a 1.1% gain from a prior report of 0.8%.

What is interesting is that both Dow Jones and Bloomberg pointed out in a blurb that the production gains are being tied to utility usage being up more than 5% for the month of March. Manufacturing actually was down by 0.1%, versus being up by 0.9% in February. Manufacturing also was shown to have decreased 0.3%, if you back out vehicle-related items, in March after a 0.8% increase the prior month. Mine production was down 0.2%, and that was even before this latest drop in commodity prices.

Pay attention to capacity utilization. This marked the third consecutive month in which capacity was above 78%, and that is a first since before the recession.

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