Industrial production in U.S. increases by most in three months

Capacity Utilization

Today’s Fed report also showed that capacity utilization, which measures the amount of a plant that is in use, increased to 79.6% in February from 79.2% a month earlier.

Utility output increased 1.6% after jumping 4.9% the prior month.

Mining production, which includes oil drilling, decreased 0.3% after falling 1% the prior month.

The breakdown of the manufacturing figures showed a 2.5% gain in production of business equipment, the biggest advance in three months. Output of construction materials and business supplies also increased in February.

Other recent reports show manufacturing is building on recent gains after a slowdown in the second half of 2012. The Institute for Supply Management’s factory gauge rose to 54.2 in February, the highest since June 2011. The gauge has advanced for the last three months.

Factory Workweek

The average factory workweek close to a record high may mean manufacturing managers may have to hire more to keep up pace with demand. Manufacturers logged an average of 41.9 hours a week in February, tying December 1997 and January 1998 as the most since 1944, when full wartime production was pulling more women into factories, according to Labor Department data. The record was 45.4 hours in January and February 1944.

The same report from the Labor Department last week showed private payrolls grew by 246,000 last month, the most since November, bringing the average gain over the past six months to more than 200,000. The unemployment rate fell to 7.7%, a four-year low.

Texas Instruments, the largest maker of analog chips, earlier this month raised the lower end of its forecasts for first-quarter sales and profit.

“The stronger demand environment that we discussed back in January has continued through the quarter and overall tracking better than our initial expectation, so we see this in our revenue trend and even more so in our orders as we’re now building backlog for the first time in several quarters,” Ron Slaymaker, vice president at Dallas-based Texas Instruments, said on a March 7 conference call.

“We have increased production starts this quarter to support the higher level of anticipated demand we have for the second quarter,” Slaymaker said.

Bloomberg News

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