U.S. industrial production lost some steam in March, slipping 0.5% and wiping out a chunk of February’s momentum, the Federal Reserve reported today. The pullback hit factories, mines and utilities and came in weaker than economists had penciled in, adding another wrinkle to an already uneven growth story heading into the second quarter.
What The Fed's Numbers Show
According to the Federal Reserve, industrial production declined 0.5% in March after an upwardly revised 0.7% increase in February. Manufacturing output edged down 0.1%, while indexes for mining and utilities dropped 1.2% and 2.3%, respectively. The report also showed overall capacity utilization easing to 75.7%, slipping slightly below recent readings.
Economists Had Expected A Small Gain
Forecasters were looking for a mild 0.1% rise in March, according to Bloomberg, so the 0.5% drop landed as a clear downside surprise. That miss is likely to feed into market and policy conversations about when any near-term easing might make sense if signs of weakness continue to stack up.
Which Sectors Slid
According to the Federal Reserve, motor vehicle and parts production tumbled 3.7% in March, pulling down broader factory totals. Output of consumer goods also moved lower. The report noted that declines were spread across many durable-goods industries, with materials and business equipment production easing as well.
What Comes Next
The weak March reading will flow into early estimates of first-quarter GDP and could temper expectations for near-term Fed easing if additional data show similar softness. Investors, manufacturers and policymakers will be keeping a close eye on the April numbers to see whether March turns out to be a short-lived, weather- or inventory-related blip or the front edge of a more persistent cooling trend.
