Economic Report: Industrial production weakens further in March
The numbers: Industrial production fell 0.1% in March, the Federal Reserve reported Tuesday. The gain was below Wall Street expectations of a 0.1% gain. This is the fourth straight weak reading for industrial production. Production rose 0.1% in February after a 0.3% decline in January.
As a result, output in the first quarter slipped at a 0.3% at an annual rate after a 4% gain in the last three months of 2018. That’s the weakest since the third quarter of 2017.
What happened: Manufacturing output was unchanged in March after falling for the past two months. Auto production fell 2.5%. For the first quarter, auto production was down at a 12.8% annual rate, the biggest decline in almost eight years. Construction material and business equipment had sizeable increases.
Mining production, which had been a bright spot last year, fell 0.8% in March, and has not increased since December. Output of utilities rose 0.2% in the month.
Capacity utilization fell to 78.8% in March, the lowest rate since last July. The capacity utilization rate reflects the limits to operating the nation’s factories, mines and utilities. It’s still below pre-recession levels, above 80%, that could fan production costs and prices.
Big picture: Industrial production has been weak for the past few months and there was no improvement in March. Prior to the report, there had been hope that the recent improvement in China’s manufacturing survey and the U.S. March Institute for Supply Management manufacturing index pointed to a more stable factory sector, but the sector’s struggles continued.
Market reaction: Futures on the Dow Jones Industrial Average YMM9, +0.62% were higher on Tuesday as investors examined a spate of corporate earnings.