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Economy in Brief

U.S. Industrial Production Drops 2.2% in February After 4 Strong Months
by Carol Stone, CBE  March 16, 2021

• Manufacturing output fell 3.1%. Mining down 5.4%.

• Widespread declines in durable and nondurable goods manufacturing industries.

• Utilities advanced 7.4%.

Industrial production fell 2.2% in February (-4.2% y/y). It had advanced 1.1% in January, 1.0% in December, 0.9% in November and 1.0% in October. The Action Economics Forecast Survey looked for a 0.3% m/m gain for February. Nearly all industry groups experienced the February declines. Manufacturing output fell 3.1% (-4.1% y/y) after a 1.2% increase in January. Mining output declined 5.4% (-15.3% y/y) following a 2.1% increase in January. Utilities were the exception in February, as their output advanced 7.4% (10.1% y/y) after falling 0.6% in January.

Durable manufacturing output fell 2.6% in February (-4.0% y/y) after a 1.5% gain in January. Among those individual industries, only primary metals and aerospace and miscellaneous transportation equipment had increases, with declines marked in the other nine industries in that sector. Specifically, motor vehicle industry output fell 8.3% in February (-8.6% y/y).

Nondurable goods output fell 3.7% in the month (-3.6% y/y) after increasing 1.1% in January and 1.2% in December. The only industry with an increase was textiles and product mills, which saw their production increase 0.6% (-3.3% y/y). Otherwise, the biggest declines in February output were in chemicals, which plunged 7.1% m/m (-5.1% y/y) and in petroleum and coal products, 4.4% (12.3% y/y)

The output of electric and gas utilities rose in February by 8.4% (+11.0% y/y); electric power generation, transmission and distribution rose 5.6% (+10.3% y/y) and natural gas distribution surged by 16.7% (12.0% y/y). It is possible that cold weather contributed to the demand for utility output; the national average temperature in February was 30.6 degrees, according to National Climate Data Center. In February 2020, the national average was 36.2 degrees, with 31.8 degrees in February 2019 and 35.5 in 2018

The index for mining fell 5.4% last month (-15.3% y/y). Oil and natural gas extraction, which had risen for three months, turned down in February by 6.3% (-14.3% y/y). Other mining, which includes coal, metals and nonmetallic mineral mining and quarrying fell 5.9% in the month (-8.4% y/y).

Output of selected high technology equipment decreased 0.3% m/m (7.9% y/y) in February. Excluding these products, overall production fell 2.3% m/m (-4.0% y/y). Excluding both high tech products & motor vehicles, factory production fell 1.9% m/m (-3.7% y/y).

Capacity utilization for the industrial sector increased dropped to 73.8% last month from 75.5% in January. Factory sector utilization was 72.3%, down from 74.6%.

Industrial production and capacity are located in Haver's USECON database. Additional detail on production and capacity can be found in the IP database. The expectations figures come from the AS1REPNA database.

Industrial Production (SA, % Change) Feb Jan Dec Feb Y/Y 2020 2019 2018
Total Output -2.2 1.1 1.0 -4.2 -6.7 0.9 3.9
Manufacturing -3.1 1.2 0.7 -4.1 -6.5 -0.2 2.3
   Durable Goods -2.6 1.5 0.5 -4.0 -8.7 0.7 3.4
     Motor Vehicles -8.3 0.1 -0.1 -8.6 -15.0 -2.4 4.1
     Selected High Tech -0.3 2.0 -0.4 7.9 4.3 5.1 6.4
   Nondurable Goods -3.7 1.1 1.2 -3.6 -3.9 -0.7 1.9
Utilities 7.4 -0.6 3.8 10.1 -2.7 -0.8 4.4
Mining -5.4 2.1 0.4 -15.3 -10.3 7.1 12.4
Capacity Utilization (%) 73.8 75.5 74.6 76.9 72.0 77.8 78.7
   Manufacturing 72.3 74.6 73.7 75.2 70.3 75.6 76.6
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