U.S Industrial Production dropped 0.5% in March, missing market expectations for a 0.1% gain and after moving up 0.7% in February.
The drop comes after production moved up for two consecutive months (up 0.7% in January and 0.2% in February). Still, the annual rate grew 0.7% in March and 2.4% in the first quarter.
The Federal Reserve’s latest Industrial Production and Capacity Utilization report, issued April 16, showed that manufacturing output was also down 0.1% in March month-over-month yet grew at a 3.0% rate in the first quarter compared to a year earlier.
The March indexes for mining and for utilities moved down 1.2% month-over-month and 2.3% year-over-year, respectively.
Meanwhile, U.S. industrial capacity utilization receded to 75.7% — a rate that is 3.7 percentage points below its long-run (1972–2025) average. At 101.8% of its 2017 average, total industrial production was 0.7% above its year-earlier level.
U.S. Industrial Production: Month-Over-Month % Change
U.S. Industrial Production: Year-Over-Year % Change
Market Groups
Production slowed in most market groups in March. Declines in the indexes for consumer goods, for business equipment and supplies and for materials were partially offset by growth in the output of construction supplies and of defense and space equipment.
Declines were widespread among consumer goods industries. The index for consumer durable goods declined 1.8%, led by a 2.8 % decrease in the production of automotive products. A 0.8% decline in the index for consumer nondurables was led by a 2.1% decline in consumer energy production. The index for business equipment stepped down 0.3%, with reduced production of transit equipment more than offsetting increased production of information processing equipment and of industrial and other equipment. The output of materials fell 0.6%, led by declines in the output of consumer parts and of energy materials.
Manufacturing Detail
In March, a 0.2% decrease in the production of durable goods reflected weaker output of motor vehicles and parts, which fell 3.7%, as well as declines in the output of primary metals, machinery, and furniture and related products.
Nondurable manufacturing output edged down 0.1%, with more industry groups posting losses than posting gains. In particular, only the indexes for petroleum and coal products, for plastics and rubber products, and for paper increased, while all other nondurable indexes decreased.
Mining output decreased 1.2% in March. The index for utilities contracted 2.3%, with reductions in the output of both electric and natural gas utilities.
Capacity utilization for manufacturing declined 0.2 percentage point to 75.3% in March and is now 2.9 percentage points below its long-run (1972–2025) average. The operating rate for mining fell 1.0 percentage point to 84.5%, and the operating rate for utilities declined 1.8 percentage points to 70.3%. The utilization rates for mining and utilities were 0.7 percentage point and 13.7 percentage points below their long-run averages, respectively.
