March Industrial Production and Capacity Not Driven by Manufacturing

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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