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Economy in Brief

U.S. Industrial Production Weakened by Lower Oil Prices and Warm Weather; Factory Output Improves Modestly
by Tom Moeller  March 16, 2016

Industrial output declined 0.5% (-1.0% y/y) last month following a 0.8% increase during January, revised from 0.9%. A 0.3% decline had been expected in the Action Economics Forecast Survey.

The decline in oil prices pulled down output in the mining sector by 1.5% (-10.0% y/y) last month. It has fallen 12.9% since the peak in December 2014. Warm weather reduced utility output 4.0%, and it is down 9.2% from the peak in February 2015.

Factory sector production improved 0.2% (1.8% y/y) following an unrevised 0.5% rise. In the durable goods sector, production rose 0.4% (1.6% y/y) for the second straight month. Machinery production jumped 0.8% (-4.4% y/y), up for the first month in six. Primary metals output also rose 0.8% (-3.6% y/y), up for the first month in four. To the downside was motor vehicle & parts production by 0.1% (9.2% y/y), but that followed a 3.5% rise. Electrical equipment production strengthened 0.6% (7.4% y/y).

In the nondurable goods sector, industrial production eased 0.1% (+2.0% y/y) following a 0.8% rise. Textile mill output fell 1.4% (+1.8% y/y) after a 1.3% increase. Food, beverage & tobacco production fell 0.8% (+2.2% y/y) and also reversed the January gain. Offsetting these declines was a 2.9% rise (-3.8% y/y) in apparel production which mostly reversed a 3.5% January increase. Petroleum & coal production gained 2.5% (2.9% y/y) after a 0.6% rise. Chemical production was little changed (2.2% y/y).

In the subcategory groupings, high technology product production eased 0.1% (+1.4% y/y) following two firm increases. Computer & office equipment production declined 0.9% (1.8% y/y) after a 9.9% jump. Communications equipment production fell 0.4% (+3.7% y/y) following a 0.7% easing. Total factory output excluding both the auto & high technology sectors rose 0.2% (1.2% y/y) on the heels of a 0.3% rise.

Capacity utilization declined to 76.7%, down from 79.0% in December 2014. Factory sector utilization held steady m/m at 76.1%, and its been moving sideways since the end of 2014. Industry capacity rose 1.2%y/y while factory sector capacity also improved 1.2% y/y.

Industrial production and capacity data are included in Haver's USECON database, with additional detail in the IP database. The expectations figure is in the AS1REPNA database.

Industrial Production (SA, % Change) Feb Jan Dec Feb Y/Y 2015 2014 2013
Total Output -0.5 0.8 -0.5 -1.0 1.3 3.7 1.9
Manufacturing 0.2 0.5 -0.2 1.8 2.0 2.5 0.9
    Consumer Goods -0.7 1.8 -0.4 1.0 2.0 2.2 1.5
    Business Equipment 0.6 0.6 -0.9 -0.2 1.8 4.8 -0.4
    Construction Supplies 0.5 -0.3 0.2 2.8 2.8 3.9 2.8
  Materials -0.7 0.4 -0.5 -2.6 1.5 5.1 3.1
Utilities -4.0 4.2 -1.2 -9.2 -0.6 1.0 2.5
Mining -1.4 -0.7 -1.6 -10.0 -1.5 10.8 6.5
Capacity Utilization (%) 76.7 77.1 76.5 78.4 77.8 78.1 76.7
 Manufacturing 76.1 76.1 75.7 76.1 76.1 75.3 74.0
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