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Economy in Brief

U.S. Industrial Output Is Stable; Factory Output Gains
by Tom Moeller  March 16, 2012

The weather can immensely impact factory output, and during the last few months that was notably true. Industrial production was unchanged last month (4.0% y/y) following a revised 0.4% January rise, initially reported as no change. The latest figure disappointed Consensus expectations for a 0.4% increase according to Action Economics. Factory sector output added 0.2% (5.0% y/y) to its strengthened 1.1% January rise. Warm temperatures lowered utility output by another 0.1% last month (-7.1% y/y) and mining output was off 1.2% (+4.3% y/y).

Business equipment production continued strong with a 0.6% rise. During the last twelve months, output increased 10.8% and equaled last year's rise. This y/y gain still reflects a one-quarter y/y rise in transit equipment, 9.0% y/y growth in information processing & other and a 6.3% y/y rise in industrial supplies & other. In the consumer sector, where output rose 1.5% y/y, auto production jumped 13.8% y/y while computers, video & audio posted a modest 2.9% y/y gain. Appliance, furniture & carpeting production rose 3.8% y/y. Nondurables output rose 2.0% y/y but clothing production was off 1.2% y/y. Excluding the high-tech & motor vehicle industries, industrial production increased 3.7% y/y as of February following like y/y gains in 2011 and 2010.

Capacity utilization slipped to 78.7% last month. In manufacturing alone, utilization ticked up to 77.4%, up from the recession low of 64.4%. Overall capacity is estimated to have risen 1.2% y/y following a 0.3% uptick last year and a 2.2% decline during 2010. In the factory sector, capacity rose 1.0% y/y but excluding the high-tech industries the rise was just 0.3% following four years of decline.

Industrial production and capacity data are included in Haver's USECON database, with additional detail in the IP database. The expectations figure is in the AS1REPNA database.

Policy Initiatives in the Global Recession: What Did Forecasters Expect? from the Federal Reserve Bank of New York can be found here.

Industrial Production (SA, % Change) Feb Jan Dec Feb Y/Y 2011 2010 2009
Total Output 0.0 0.4 0.9 4.0 4.2 5.3 -11.2
Manufacturing 0.2 1.1 1.5 5.0 4.5 5.4 -13.5
  Consumer Goods 0.0 0.4 0.5 1.5 2.0 4.3 -7.2
  Business Equipment 0.6 2.1 1.4 10.8 10.7 7.7 -16.3
  Construction Supplies 1.1 -0.1 3.0 7.5 5.1 3.8 -22.5
Materials -0.3 -0.1 1.0 4.0 4.6 6.3 -11.6
Utilities 0.0 -2.2 -3.1 -5.6 -0.1 4.0 -2.6
Capacity Utilization (%) 78.7 78.8 78.5 76.5 77.3 74.5 69.1
 Manufacturing 77.4 77.3 76.5 74.4 74.9 71.7 66.2
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