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Economy in Brief

U.S. Factory Sector Gain Recaptures January's Lost Output
by Tom Moeller  March 17, 2014

The output of U.S. factories increased 0.8% (1.6% y/y) during February following a little-revised 0.9% January decline. Overall industrial production improved 0.6% (2.8%y/y). Utility output, however, slipped 0.2% (+8.2% y/y) following the weather-induced 3.8% January increase. A 0.2% gain in total production was expected in the Action Economics Forecast Survey. Versus three months ago, a lessened 52.6% of industries registered an increase in production.

The snapback in production last month was paced by a 1.3% spurt (2.8% y/y) in business equipment production. That came after a 0.4% January falloff. It was led by a 2.0% recovery (3.8% y/y) in transit equipment after January's 1.6% drop. Consumer goods output also posted a firm 0.8% rise (2.6% y/y) after a 0.5% January drop. Motor vehicle & parts output jumped 4.9% (5.7% y/y) and recovered the January shortfall. Machinery output also improved 1.5% (3.0% y/y), showing continued strength after January's 2.3% rise. Fabricated metal production rose 1.2% (2.6% y/y) after two months of slippage. To the downside, furniture production fell 1.7% (+2.9% y/y), the third straight month of decline. Electrical equipment & appliance production fell 1.2% (-1.4% y/y) after a 1.7% drop while primary metals output fell 0.9% (-0.9% y/y), the fourth straight month of sharp decline. Amongst nondurable goods industries, textile production fell 1.1% (-2.7% y/y), the third straight monthly decline. Apparel output fell 0.7% (+0.3% y/y, also the third decline in the last four months. To the upside, chemical production recovered 1.0% (1.5% y/y) and paper output rose 0.8%, but still was off 2.0% y/y.

Within the special aggregate series, high technology industries posted a 0.9% production gain (7.8% y/y), led by a 1.4% rise (8.9% y/y) in semiconductors output. Computer output gains cooled down with a 0.1% uptick (6.7 y/y) following a 0.3% rise. Factory production excluding the high tech area rose 0.7% (1.2% y/y). Manufacturing production excluding both high tech and autos rose 0.5% (0.9% y/y).

The capacity utilization rate rose to 78.8% last month from a downwardly revised 78.5%. That remained below the 80.5% high averaged in 2007. In the factory sector, the capacity utilization rate improved to 76.4% and remained below the 78.6% level before the recession. Growth in total industry capacity was 2.0% y/y versus a 2.2% rise in 2012. Factory sector capacity increased 1.6%, about the same as during the prior two years.

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.

Industrial Production (SA, % Change) Feb Jan Dec Feb Y/Y 2013 2012 2011
Total Output 0.6 -0.2 0.0 2.8 2.6 3.6 3.3
Manufacturing 0.8 -0.9 0.2 1.6 2.2 3.9 3.4
  Consumer Goods 0.8 -0.5 0.6 2.7 2.2 1.6 1.5
  Business Equipment 1.3 0.3 -0.4 2.8 3.5 8.3 5.6
  Construction Supplies 0.2 -0.3 -0.7 0.1 4.4 5.2 3.0
Materials 0.4 0.0 -0.3 3.3 2.8 4.1 4.7
Utilities -0.2 3.8 -0.9 8.2 1.9 -2.1 -0.2
Capacity Utilization (%) 78.8 78.5 78.8 78.1 78.2 77.6 76.5
 Manufacturing 76.4 75.9 76.7 76.5 76.3 75.8 74.0
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