Important economic measure returns to pre-crisis highs

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

 

About the Author
Andrew Wilkinson

Andrew is a seasoned trader and commentator of global financial markets. He worked for several London-based banks trading cash and derivatives before moving to the U.S. to attend graduate school. Andrew re-joins Interactive Brokers following a two-year stretch at a major Wall Street broker-dealer as their Chief Economic Strategist. His coverage of stocks, options, futures, forex and bonds regularly surfaces in global media, and over the last several years Andrew has made many TV appearances on Bloomberg, BBC, CNBC and BNN and Yahoo Finance.

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