U.S. Industrial Production Rises for the Third Straight Month in March
Summary
- IP +0.4% in March; Feb. and Jan. revised up.
- Mfg. IP falls 0.5% (upwardly revised for Feb. and Jan.) w/ durable goods down 0.9% and nondurable goods down 0.1%.
- Utilities output rebounds 8.4%, the largest m/m gain since Jan. ’22, while mining activity falls for the fourth time in five months.
- Consumer goods output gains for the second consecutive month, but business equipment posts the fourth m/m drop in five months.
- Capacity utilization increases 0.2%-pt. to a four-month-high 79.8%; mfg. capacity utilization falls 0.5%-pt. to a three-month-low 78.1%.
Total industrial production rose 0.4% m/m (0.5% y/y) in March after upwardly revised increases of 0.2% in February (0.0% previously) and 0.9% in January (+0.4% in the March 28 revision; +0.3% initially), according to the Federal Reserve Board. The March m/m rise matched the forecast in the Action Economics Forecast Survey. The March IP index at 103.0 was 1.4% above its pre-COVID (February 2020) level and 0.5% below a September high. IP was little changed q/q in Q1 2023 after a 0.6% q/q decline in Q4 2022, rising at a 0.2% annualized rate vs. a -2.5% Q4 annualized rate.
By industry groups, manufacturing production fell 0.5% (-1.1% y/y) in March following upwardly revised gains of 0.6% in February (+0.1% previously) and 1.5% in January (+1.4% in the March 28 revision; +1.3% initially). Durable goods production slid 0.9% (-0.7% y/y) in March, the first m/m slide since December, after a 0.4% February increase, reflecting output drops of 2.9% (-9.5% y/y) in wood products, 2.6% (+2.1% y/y) in nonmetallic mineral products, 1.7% (-3.2% y/y) in electrical equipment & appliances, 1.5% (+1.9% y/y) in motor vehicles & parts, 1.3% (-8.8% y/y) in furniture & related products, 0.9% (-1.3% y/y) in fabricated metal products, 0.8% (-1.4% y/y) in computer & electronic products, and 0.7% (-0.3% y/y) in machinery. In contrast, production for aerospace & miscellaneous transportation equipment (0.7%; 3.4% y/y) and primary metals (0.2%; -1.5% y/y) posted their m/m increases in March, while production for miscellaneous durables goods was virtually unchanged m/m (1.2% y/y).
Nondurable goods production dipped 0.1% (-1.2% y/y) in March, the first m/m easing in three months, after a 0.9% gain in February, reflecting output declines of 0.9% (+0.8% y/y) in chemicals, 0.4% (-0.6% y/y) in food, beverages & tobacco, and 0.1% (-2.1% y/y) in printing & related support activities. To the upside, nondurable goods production for the following groups registered m/m increases in March: apparel & leather goods (2.0%; 9.3% y/y), petroleum & coal products (1.3%; -1.6% y/y), paper (0.8%; -9.9% y/y), plastics & rubber products (0.7%; -2.4% y/y), and textiles & product mills (0.3%; -8.9% y/y).
Utilities output jumped 8.4% (4.2% y/y) in March as the return to more seasonal weather boosted the demand for heating; it was the biggest monthly increase since January 2022 following drops of 0.7% in February and 7.2% in January. Meanwhile, mining activity fell 0.5% (+5.4% y/y) in March, the fourth m/m fall in five months, on top of a 1.0% February decline.
By market groups, consumer goods output rose 0.9% (0.1% y/y) in March after a 0.4% rebound in February, led by a 1.4% gain (1.2% y/y) in nondurable consumer goods. Durable consumer goods production, however, fell 0.9% (-3.9% y/y) in March following two consecutive m/m increases. Business equipment output slid 1.0% (+1.2% y/y), the fourth m/m slide in five months. Construction supplies production dropped 1.8% (-2.7% y/y), the fifth m/m decline in six months, while materials production grew 0.3% (1.2% y/y), the third successive m/m gain.
In special classifications, factory output of selected high-tech industries rose 0.5% (2.1% y/y) in March following a 2.4% increase in February and two straight m/m decreases. By contrast, manufacturing production excluding selected high-tech industries fell 0.6% (-1.2% y/y) and manufacturing production excluding both selected high-tech and motor vehicles & parts fell 0.5% (-1.5% y/y) following their two consecutive monthly rises.
Capacity utilization rose to 79.8% in March, the highest level since November, from 79.6% in February; 0.1 percentage point above its long-run (1972–2022) average. A 79.2% rate had been expected. Manufacturing capacity utilization fell to 78.1% in March, the lowest reading since December, from 78.6% in February.
Industrial production and capacity are located in Haver's USECON database. Additional detail on production and capacity utilization can be found in the IP database. The expectations figures come from the AS1REPNA database.
Winnie Tapasanun
AuthorMore in Author Profile »Winnie Tapasanun has been working for Haver Analytics since 2013. She has almost 20 years of working in the financial services industry. As Vice President and Economic Analyst at Globicus International, Inc., a New York-based company specializing in macroeconomics and financial markets, Winnie oversaw the company’s business operations, managed financial and economic data, and wrote daily reports on macroeconomics and financial markets. Prior to working at Globicus, she was Investment Promotion Officer at the New York Office of the Thailand Board of Investment (BOI) where she wrote monthly reports on the U.S. economic outlook, wrote reports on the outlook of key U.S. industries, and assisted investors on doing business and investment in Thailand. Prior to joining the BOI, she was Adjunct Professor teaching International Political Economy/International Relations at the City College of New York. Prior to her teaching experience at the CCNY, Winnie successfully completed internships at the United Nations. Winnie holds an MA Degree from Long Island University, New York. She also did graduate studies at Columbia University in the City of New York and doctoral requirements at the Graduate Center of the City University of New York. Her areas of specialization are international political economy, macroeconomics, financial markets, political economy, international relations, and business development/business strategy. Her regional specialization includes, but not limited to, Southeast Asia and East Asia. Winnie is bilingual in English and Thai with competency in French. She loves to travel (~30 countries) to better understand each country’s unique economy, fascinating culture and people as well as the global economy as a whole.
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