U.S. Industrial Production Rises for the Third Straight Month in February

Industrial production (IP) rose a larger-than-expected 0.7% m/m (1.4% y/y) in February after a downwardly revised 0.3% increase in January (+0.5% initially) and an upwardly revised 1.1% gain in December (+1.0% previously), data from the Federal Reserve Board showed. The February m/m rise was the third consecutive m/m gain following three successive m/m declines. A 0.2% m/m February increase had been expected in the Action Economics Forecast Survey. The February IP index at 104.2 was the highest on record; it was 5.3% above a low of 99.0 in September 2021 and 9.1% above a low of 95.5 in February 2021.

By industry groups, manufacturing production rose 0.9% (0.7% y/y) in February, the fourth straight m/m rise, following an upwardly revised 0.1% increase in January (-0.1% initially) and a 0.5% rise in December (unrevised). Durable goods production grew 1.6% (0.1% y/y) in February, the third m/m gain in four months, after holding steady in January. This reflected m/m output rises of 8.5% (-4.8% y/y) in motor vehicles & parts, 2.7% (4.3% y/y) in wood products, 2.1% (3.5% y/y) in aerospace & miscellaneous transportation equipment, 2.0% (6.4% y/y) in electrical equipment, appliances & components, 0.4% (-2.1% y/y) in fabricated metal products, 0.3% (-5.5% y/y) in miscellaneous durables goods, 0.3% (1.5% y/y) in nonmetallic mineral products, 0.2% (7.0% y/y) in computer & electronic products, and 0.1% (-0.8% y/y) in machinery. In contrast, the following durable goods categories fell m/m in February, including output drops of 1.0% (-3.7% y/y) in furniture & related products and 0.3% (-0.3% y/y) in primary metals. Notably, aircraft & parts production rose 2.3% (4.4% y/y) in February, the fourth consecutive m/m rise, on top of a 10.3% gain in January.

Nondurable goods production was up 0.2% (1.6% y/y) in February, the fifth m/m increase in six months, after a 0.1% uptick in January. The February increase reflected m/m output rises of 1.3% (-3.4% y/y) in apparel & leather goods, 1.0% (5.8% y/y) in chemicals, 0.9% (2.7% y/y) in printing & related support activities, 0.9% (0.7% y/y) in textiles & product mills, 0.4% (-4.7% y/y) in plastics & rubber products, and 0.1% (0.0% y/y) in paper. To the downside, the following nondurable goods categories fell m/m in February, including output drops of 0.7% (-0.7% y/y) in food, beverages & tobacco and 0.4% (+2.7% y/y) in petroleum & coal products.

Mining activity rose 2.8% (0.0% y/y) in February, up from the second month in three, following a downwardly revised 3.2% decline in January (-1.2% initially). Utilities output, however, slid 2.5% (+8.7% y/y), the first m/m slide since November, after a downwardly revised 6.1% January gain (+7.2% initially).

By market groups, business equipment output rose 1.6% (-0.6% y/y) in February, the fourth successive m/m rise, after a 1.5% increase in January. Construction supplies production recovered 1.0% (0.7% y/y) after a 0.6% January drop and materials production rose 1.0% (2.3% y/y) following a 0.3% January decline; both registered the second m/m gain in three months. Consumer goods output increased 0.2% (0.7% y/y) in February after rising 0.8% in January and December, reflecting a 4.3% rebound (-5.2% y/y) in durable consumer goods and a 0.8% drop (+2.4% y/y) in nondurable consumer goods.

In special classifications, factory output of selected high-tech industries rose 1.4% (12.6% y/y) in February, the seventh m/m rise in eight months, after an upwardly revised 3.5% advance in January (+0.2% initially). Manufacturing production excluding selected high-tech industries was up 0.9% (0.4% y/y) in February, the third m/m gain in four months, after virtually unchanged in January; manufacturing production excluding selected high-tech and motor vehicles & parts grew 0.3% (0.8% y/y), the third straight m/m increase, after a 0.4% January rise.

Capacity utilization rose to 78.2% in February, the highest since June, from a downwardly revised 77.7% in January (77.8% initially). The Action Economics Forecast Survey forecasted 77.8%. The February reading was 1.4 percentage points below its long-run (1972–2024) average. Manufacturing capacity utilization rose to 77.0% in February, the highest since August, from an upwardly revised 76.4% in January (76.3% initially); the February rate was 1.2 percentage points below its long-run average.

Industrial production and capacity data are 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.