Photo: Revisorweb via Wikimedia Commons

Photo: Revisorweb via Wikimedia Commons

UPDATED -- Industrial production in the U.S. increased 0.1% in February from the month before, but is 3.5% higher than the same time a year ago.

The U.S. Federal Reserve also reported on Monday that January’s figure was revised downward from a 0.2% gain in December to a 0.3% decline.

During February, manufacturing output moved down 0.2% from January, its third consecutive monthly decline. The production of durable goods fell 0.6 %, with widespread losses among its components while the production of nondurable goods increased 0.2%. The motor vehicles and parts industry posted a loss of 3.0%, the largest decrease among durable goods manufacturers. Most other industries moved down more than 0.5%

Mining output declined 2.5%, due to drop in coal miming along with oil and gas well drilling, while the output of utilities jumped 7.3%, as especially cold temperatures drove up demand for heating.

Capacity utilization for the industrial sector decreased 0.2 of a percentage point to 78.9% in February, a rate that is 1.2 percentage points below its long-run average from 1972 to 2014, which has slowly recovered since the Great Recession, but hasn’t been above 80% since before the economic downturn.

February’s weaker-than-expected industrial production figures serve to broaden the recent slew of disappointing US economic reports, according to Sterne Agee Chief Economist Lindsey Piegza. “Plagued by tepid domestic and declining international demand amid a rapidly increasing dollar making U.S. made goods relatively more expensive and less attractive, manufacturing activity has slowed."

She said when this is coupled with disappointing data on the consumer, investment, and housing fronts, as well as overall growth measures as of late with a second-round downward revision to the fourth quarter gross domestic product level, there will “no doubt be a fruitful discussion at Wednesday's Federal Open Market Committee meeting surrounding the direction and momentum in the domestic economy.”

Home Builder Confidence Slips

A separate report, also released on Monday, shows builder confidence in the market for newly built, single-family homes in March fell two points to a level of 53, according to the National Association of Home Builders/Wells Fargo Housing Market Index.

This marked the third straight monthly decline. A reading above 50 indicates optimism.

“Even with this slight slip, the HMI remains in positive territory and we expect the market to improve as we enter the spring buying season,” said NAHB Chairman Tom Woods.

Two of the three HMI components posted losses in March. The component gauging current sales conditions fell three points to 58 while the component measuring buyer traffic dropped two points to 37. The gauge charting sales expectations in the next six months held steady at 59.

“The drop in builder confidence is largely attributable to supply chain issues, such as lot and labor shortages as well as tight underwriting standards,” said NAHB Chief Economist David Crowe. “These obstacles notwithstanding, we are expecting solid gains in the housing market this year, buoyed by sustained job growth, low mortgage interest rates and pent-up demand.”

Update adds industrial produciton analysis and home builder report.

 

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Evan Lockridge

Evan Lockridge

Former Business Contributing Editor

Trucking journalist since 1990, in the news business since early ‘80s.

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