The 2020 Mid-Year Economic Update_long

Industrial Production Down 0.6 percent in March

Manufacturing output increases 0.1 percent for the month.

Industrial production decreased 0.6 percent in March after increasing 0.1 percent in February, according to the Federal Reserve.  For the first quarter as a whole, industrial production declined at an annual rate of 1 percent, the first quarterly decrease since the second quarter of 2009. In March, manufacturing output moved up 0.1 percent for its first monthly gain since November; however, factory output in January is now estimated to have fallen 0.6 percent, about twice the size of the previously reported decline. The index for mining decreased 0.7 percent in March.

The output of utilities fell 5.9 percent to largely reverse a similarly sized increase in February, which was related to unseasonably cold temperatures. At 105.2 percent of its 2007 average, total industrial production in March was 2 percent above its level of a year earlier. Capacity utilization for the industrial sector decreased to 78.4 percent in March, a rate that is 1.7 percentage points below its long-run (1972–2014) average.

Business equipment was the only major market group to post a gain in March, up 0.2 percent, mainly due to higher output of transit equipment. The index for consumer goods moved down 0.6 percent, with the decrease due to a drop of 5 percent in consumer energy products. The index for non-energy nondurable consumer goods moved up 0.2 percent. The output of durable consumer goods increased 1.7 percent, as a gain of 3 percent in automotive products outweighed declines in home electronics and in appliances, furniture, and carpeting. The index for materials fell 0.5 percent, with decreases in the output of both non-energy and energy materials.

Manufacturing output edged up 0.1 percent in March and fell 1.2 percent for the first quarter. In March, the production of durable goods moved up 0.2 percent, on the strength of a rebound in the production of motor vehicles and parts, and the production of nondurable goods moved up 0.1 percent.

“The short-term outlook for manufacturing is murky," said Cliff Waldman, director of economic studies for the MAPI Foundation, the research affiliate of the Manufacturers Alliance for Productivity and Innovation.  "Spring weather might strengthen domestic U.S. demand as meteorological patterns have been outside of seasonal norm, but an array of global challenges creates a downside risk for even moderate manufacturing performance."

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