Industrial Production

**  Industrial production was slightly stronger than consensus forecasts, rising 0.1% in February (production was unrevised at 0.9% in January).  Manufactured production fell 0.2% in February (the Fed said “Production was likely held down somewhat by winter storms in the Northeast”), while utilities output rose 0.5% and mining production increased 2.0%.
 
**  Capacity utilization rose to 72.7% in February from 72.5% in January.
 
BOTTOM LINE:  For a report that was likely held back by storms given its reliance on the hours worked data (the storm effects confirmed by Fed statisticians), industrial activity was very solid in February.  Manufacturing activity declined as a result of a fall in vehicle production.  Utilities output has been surging (up 30% at an annual rate since November), which has boosted industrial activity.  However, manufactured output appears to be growing at a pace around 5½% in the first quarter, which adds further support to the view that the gain in real GDP will be fairly solid in the quarter. 

Source:  RDQ Economics

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