Factory Output in U.S. Cools After Surging in Previous Month

(Bloomberg) -- U.S. factory production cooled in March after surging a month earlier, representing a pause in an otherwise strong manufacturing sector, Federal Reserve data showed Tuesday.

Key Takeaways

Factory output expanded at a 3.1 percent annualized rate in the first quarter following a 5.5 percent pace of the final three months of 2017, the strongest back-to-back period in six years. Manufacturing makes up 75 percent of total industrial production and accounts for about 12 percent of the economy.

The outlook for manufacturing remains solid as fiscal stimulus provides support for increased business investment, while improving global economies and a weaker dollar help underpin U.S. exports. Economists also expect lower taxes to bolster domestic consumer demand. One potential risk to some American manufacturers is the trade spat between the U.S. and China.

Meanwhile, the factory-use rate eased in March to 75.9 percent from 76 percent a month earlier that was the highest since August 2015. While the plant-use rate has been climbing, it remains 2.4 percentage points below the long-run average.

Other Details

• Utility output jumped 3 percent after being restrained the prior month by warmer-than-normal temperatures
• Mining production rose 1 percent; with oil and gas well drilling rising 4.1 percent
• Durable goods manufacturing climbed 0.4 percent, while output of non-durable goods fell 0.3 percent on declines in foods, plastics and textiles
• Production of motor vehicles and parts increased 2.7 percent after a 3.9 percent advance
• Production of consumer goods rose 0.5 percent, the most in three months, while output of business equipment also climbed 0.5 percent

--With assistance from Jordan Yadoo

To contact the reporter on this story: Katia Dmitrieva in Washington at edmitrieva1@bloomberg.net.

To contact the editors responsible for this story: Scott Lanman at slanman@bloomberg.net, Vince Golle

©2018 Bloomberg L.P.