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Slow Gains In Industrial Production

04/15/2010
Despite robust manufacturing activity reports, industrial production only increased 0.1 percent last month, and just 7.8 percent in the first quarter of this year.

Manufacturing output in March rose 0.9 percent thanks mostly to widespread gains in durable good industries. Capacity utilization for manufacturing moved up 0.6 percentage point in March to 70.0 percent, a rate 4.9 percentage points above its trough in June 2009.

Factory production rose at an annual rate of 6.6 percent for the first quarter as a whole, according to the Federal Reserve Industrial Production and Capacity Utilization report released today.

Utilities output dropped 6.4 percent; after a relatively cold February, demand for heating fell in March as temperatures climbed to above-normal levels. At 101.6 percent of its 2002 average, industrial output in March was 4.0 percent above its year-earlier level.

The output of consumer goods declined 0.2 percent though output in the first quarter rose at an annual rate of 4.9 percent, and the index in March was 3.3 percent above its year-earlier level.

The index for business equipment expanded 1.4 percent in March; this index rose 13.2 percent at an annual rate for the first quarter.

The quarterly gain was boosted by strength in the production of industrial and other equipment and of information processing equipment.

Industrial and other equipment increased 0.8 percent in March and gained 16.1 percent at an annual rate in the first quarter; the advance in the first quarter was this category's largest gain since the fourth quarter of 1987.

Within nonindustrial supplies, the output of construction supplies advanced 2.3 percent in March and increased 4.9 percent at an annual rate in the first quarter; nevertheless, the index in March was little changed from its year-earlier level.

Nondurable manufacturing advanced 0.5 percent in March and increased 4.8 percent at an annual rate in the first quarter, the third straight quarterly gain. The output of petroleum and coal products jumped 3.0 percent in March, while plastics and rubber products posted an increase of 1.7 percent.

The Federal Reserve Board plans to issue on June 25, 2010, its annual revision to the index of industrial production (IP) and the related measures of capacity utilization. The revised IP indexes will incorporate detailed data from the 2007 Economic Census and the 2008 Annual Survey of Manufactures, both conducted by the U.S. Census Bureau. Once the revision is published, it will be available on the Board's website at www.federalreserve.gov/releases/G17.

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