U.S. Industrial Production – Mar 2017

Released Tuesday, April 18, 2017

downloadsIndustrial Production: +0.5% month-over-month (Cons: +0.5%); +1.5% year-over-year
Manufacturing Production: -0.4% month-over-month (Cons: +0.0%); +0.8% year-over-year
Capacity Utilization: 76.1% (Cons: 76.1%); (75.7% prior month)

Quick Take:
Headline industrial production rose at its fastest month-over-month pace since December, driven by utilities output. Utilities output rose 8.7% month-over-month contributing nearly 0.9 percentage points to headline industrial production growth. Utilities output had been very weak in January and February due to mild winter weather. Winter weather returned in March helping utilities output growth. Offsetting the utilities output contribution was a decline in manufacturing production.

Manufacturing production declined for the first time in seven months, falling 0.4% month-over-month. Declines in motor vehicle and parts production, machinery production, and aerospace and transportation production drove the decline in manufacturing production. February manufacturing growth was also revised downwards. For the quarter, manufacturing production grew 0.7% compared to Q4 2016.

The March weakness and February downward revision to manufacturing production indicates that the industrial side of the economy continues to face headwinds. While certain sectors within manufacturing saw improvement to start the year, other sectors fared worse, most notably autos. Motor vehicle and parts production declined 11% at an annualized rate in the first quarter. Auto production may serve as a potential drag to overall manufacturing production growth in the coming months as the sector has been weaker due to lower auto sales and higher automobile inventories.