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Economy in Brief

Industrial Output Gains Moderate M/M, But Remain Broad
by Tom Moeller March 15, 2010

Cold weather and utility demand were behind much of the gain in overall industrial output last month, but improvement elsewhere remained evident. Industrial production inched 0.1% higher after an unrevised 0.9% January gain and a downwardly revised 0.5% December increase. The latest figure compared to a Consensus expectation for no change in output. Year-to-year improvement in output is, however, more impressive than these latest monthly results. The gain versus February of last year amounts to 1.7% and since the low last June output has risen 5.4%. These increases compare to the 9.8% decline during all of last year.

Severe weather dumped several feet of snow on the Northeast and Midwest. That necessitated another 0.5% increase in utility output which raised it 4.4% from last February. These increases followed declines last year.

Gains in output have been about as broad-based as they get. Sixty-percent of industries posted monthly output gains, holding near the 64% level versus six months ago. In the factory sector output dipped 0.2% due primarily to a 4.5% decline (+22.9% ) in motor vehicle & parts production. That reversed a like increase during January. Elsewhere, computer (7.8% y/y), electrical equipment (-2.6% y/y) and paper (0.0% y/y) output posted monthly gains near 1.0%. Petroleum output also posted a strong 2.3% increase (-5.2% y/y). Output declined modestly in the furniture (-12.0% y/y), primary metals (+27.8% y/y) and apparel (+2.7% y/y) industries.

Capacity utilization rose further to 72.7%, its highest level since December 2008, from a downwardly revised 72.5% in January. In the factory sector alone utilization rose to 69.0% from the 2009 low of 65.1%. Utilization in the primary metals area has risen sharply to 62.3% from a 2009 average of 51.3%. There's also been rise in utilization in the motor vehicle sector to 52.8% from a low of 36.8% in June. Utilization was 77.0% in 2005. In the electrical equipment industry utilization rose to 72.8% from the low of 69.3% last year. The rise in overall industrial utilization was accompanied by another 0.1% m/m decline in capacity which was off a record 1.2% y/y.

The industrial production data are available in Haver's USECON database.

Industrial Production (SA,%) February January December Y/Y 2009 2008 2007
Total Output 0.1 0.9 0.5 1.7 -9.8 -2.2 1.5
Manufacturing -0.2 0.9 -0.2 1.4 -11.3 -3.2 1.4
Consumer Goods -0.4 0.9 0.2 2.2 -5.2 -2.6 0.9
Business Equipment 0.4 1.5 1.1 -0.7 -12.4 -1.1 2.7
Construction Supplies 0.4 1.1 -2.2 -4.5 -17.8 -6.3 -2.0
Materials 0.3 0.8 0.5 2.9 -10.9 -1.9 2.0
Utilities 0.5 0.6 5.5 4.4 -2.7 0.3 3.4
Capacity Utilization (%) 72.7 72.5 71.8 70.6 (Feb. '09) 70.1 77.5 80.6
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