Industrial Production/Capacity utilization
It turns out that February was the really strong month for manufacturing after the Fed revised higher the pace of advancing output. March too was strong, but in that month some sectors came off the boil. Auto and parts production, for example, slipped by 0.8% in March but after a whopping 6.9% February increase. The annualized pace of auto output thereby eased to 11.27 million units from a pace of 11.5.
However, the omens look good for a broad-based rebound given the earlier consumer spending report, and as the level of capacity utilization across all industries rose to 79.2 to reach its highest since June 2008. Business equipment rose by 0.5% following a 2.0% February gain. Within that advance, construction materials rose by 0.2% having jumped by 1.05 in the prior month.
Output of computers and electronic equipment also gained. Consumer goods production also advanced at a slacker pace. Appliances, furniture and carpeting all advanced but the overall pace of 0.7% for the group compares to a 1.4% gain in February. Adding to the strength among manufacturers, output across energy industries bounded in March with utilities expanding output by 1% as natural gas output recovered, while mining output advanced by 1.5%.
Overall, a sturdy report consistent with the theory that the economy is rebounding from a harsh winter.
Chart – Capacity utilization at six-year high even as auto production takes a breather