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U.S. Industrial Production Was Little Changed in February

Friday, 16 Mar 2012 10:58 AM

(Updates with economist’s comment in fourth paragraph.)

March 16 (Bloomberg) -- Industrial production in the U.S. was little changed in February, reflecting slower manufacturing and a decline in mining.

The output at factories, mines and utilities compared with a median projection for a 0.4 percent gain in a Bloomberg News survey of economists. January production was revised to a 0.4 percent increase, previously reported as no change, figures from the Federal Reserve showed today in Washington. Factory production, which makes up about 75 percent of total output, rose at the slowest pace in three months.

Higher energy costs and less European demand for U.S. exports may be prompting some manufacturers to limit production. At the same time, growth in the industry at the forefront of the expansion will probably be sustained on the heels of stronger retail sales and corporate investment in new equipment.

“The trend for manufacturing has been good but not great,” said Aaron Smith, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, who projected a 0.1 percent rise in industrial production. “Slowing in certain parts of the world -- Europe and China -- will have an impact, and the lift from inventories is fading.”

Auto production cooled in February after surging a month earlier, while the output of consumer goods was little changed, today’s report showed. Manufacturing accounts for about 12 percent of the U.S. economy.

Estimates of the 81 economists surveyed by Bloomberg ranged from gains of 0.1 percent to 1 percent.

Stocks advanced for a second day, with the Standard & Poor’s 500 Index climbing 0.2 percent to 1,405.2 at 9:34 a.m. in New York.

Consumer Prices

Another report today showed the cost of living increased as gasoline prices picked up. The consumer-price index climbed 0.4 percent in February, the most in 10 months, after a 0.2 percent gain a month earlier, the Labor Department said in Washington. The so-called core measure, which excludes fuel and food, rose 0.1 percent, less than forecast.

Capacity utilization, which measures the amount of a plant in use, was little changed at 78.7 percent last month after 78.8 percent in January, today’s Fed report showed.

The output of motor vehicles and parts fell 1.1 percent after jumping 8.6 percent in January, today’s figures show. Manufacturing excluding autos and parts climbed 0.4 percent following a 0.6 percent increase.

Business Equipment

Production of business equipment rose 0.6 percent after a 2.1 percent increase.

Auto manufacturing has been contributing to factory growth. Cars last month sold at the fastest pace in four years, led by Chrysler Group LLC and a surprise gain from General Motors Co. Light-vehicle sales accelerated to a 15 million annual rate, the strongest since February 2008, according to Ward’s Automotive Group.

CSX Corp., the biggest U.S. eastern railroad, is benefitting as automotive demand climbs, prompting forecasters to revise estimates for 2012 light-vehicle production to 14.4 million cars. The Jacksonville, Florida-based company said yesterday its auto volume has advanced about 20 percent this year through March 9.

“From our perspective, we’re seeing an economy that is sequentially improving,” Fredrik Eliasson, chief financial officer at CSX, said at a JPMorgan Chase & Co. conference in New York. “Our merchandise business is on track. We’re about 3 percent up. Clearly, automotive is helping that significantly.”

Vehicle Production

Auto production “is critical not just for our automotive business, but also for our steel business, our chemical business and our intermodal business,” he said.

Total industrial output last month was tempered by limited utility use because February was relatively mild. The average temperature was 38.2 degrees Fahrenheit (3.4 Celsius) last month, 3.6 degrees warmer than the 20th century average and the 17th warmest February in 118 years.

Utility production was little changed in February after slumping 2.2 percent in January. A 1.2 percent drop in mining, which includes oil and natural gas drilling, also hindered total industrial output.

Regional manufacturing reports yesterday showed factories continue to expand in March.

The Federal Reserve Bank of Philadelphia’s general economic index increased to 12.5, the highest since April, from 10.2 in February. The Federal Reserve Bank of New York’s general economic index unexpectedly increased to 20.2, the fastest pace of expansion since June 2010, from 19.5 last month. Readings greater than zero in both gauges signal expansion.

While the job market is improving, Fed policy makers said the unemployment rate is too high.

“Labor market conditions have improved further,” Federal Open Market Committee members said in a March 13 statement. “The unemployment rate has declined notably in recent months but remains elevated. Household spending and business fixed investment have continued to advance.”

--With assistance from Natalie Doss in New York and Chris Middleton in Washington. Editor: Vince Golle, Kevin Costelloe

To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

© Copyright 2017 Bloomberg News. All rights reserved.

 
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