Factory production rose in March, promising more freight for carriers. According to figures released Tuesday, March production increased 0.3% after declining 2.1% over the last six months. This is the first hard evidence that surplus inventories are being cleared out.
The three sectors with significant gains - motor vehicles (7%), semiconductors (0.9%) and computers (0.7%) - are the industries that had the biggest inventory problems earlier and were the most aggressive in cutting production to absorb inventory. Semiconductor and computer production is back to late 2000 levels, but motor vehicle production is still 12% below the 2000 peak.
Production of consumer non-durable goods slipped 0.4%, continuing a nine-month slide. Furniture was off again with a 0.4% decline. Industrial equipment production fell 0.3%. Production of metals, metal products and materials was unchanged from February.
The Commerce Department reported housing starts looked better in March when compared to February, falling just 1.3% versus a 2.2% drop the month before. While this may not be the increase that trucking companies who haul construction materials were hoping for, it does indicate the U.S. home building market is still healthy, thanks at least in part to interest rates cuts made by the Federal Reserve earlier this year.
Finally, consumer prices during March registered their smallest increase in seven months, moving up just a scant 0.1%. That follows a 0.3% increase the month before. The main reason was a drop in energy prices, which may very well be erased once April’s numbers are out, considering increases consumers and truckers have seen at the pumps so far this month.
When the volatile food and energy prices are removed, March prices increased even less, 0.2%, matching analysts' expectations. So far this year, the Consumer Price Index has registered an annual rate of 4%, compared with 3.4% last year, due mainly to higher energy prices.