Industrial production fell 0.5% last month after an unrevised 0.1% rise during January. The decline was greater than the 0.1% slip that was generally expected. The cause of the surprise, however, primarily was due to a 3.7% drop in utility output, caused by warm Winter temperatures during February.

Factory output fell 0.3% during February. A reading of no change in January production was revised down from a 0.1% uptick reported initially. The m/m decline was the first since October and three month growth in output fell to -0.7% (AR). Production in the high tech sector rose 1.1% last month after a 0.3% January increase. Outside the high tech sector, factory output fell 0.4% during February after having been unchanged during January. Three month output growth fell to -1.1% (AR).

Production of computers & electronics again surged last month by 1.2% and three month growth totaled a strong 12.3%.

Severe weakness has taken over output elsewhere in the durable goods area. Output of furniture & appliances fell 3.1% last month after a 2.5% January decline. Three month output growth here fell to -25.4% at an annual rate. Output of automotive products dropped 1.2% and on a three month basis fell 6.2%. In the nondurables sector apparel product output fell 0.4%, the second consecutive decline, though that followed a strong 2.4% December jump. On a three month basis output growth was a still firm 3.2%.

Output of business equipment ticked up 0.1% for the second month and three month growth totaled 4.2%. Output of industrial equipment less high tech slipped 0.1% with three month growth still positive at 3.9%.

Output of construction supplies fell 0.7% during February for the second consecutive month and three month growth remained negative at -3.7%.

Capacity utilization fell to 80.9%, its lowest level since late 2005. Utilization in the factory sector slipped to 79.3%, its lowest also since late 2005. Annual growth in capacity is estimated at 1.7% y/y for 2.1% in the factory sector.

Yesterday the Federal Reserve announced two initiatives to promote financial market liquidity and orderly market functioning. The text of the announcement can be found here.