Production at US factories increased more than expected in February amid a rise in temperatures, but data for the prior month was revised sharply down as manufacturing remains hamstrung by high interest rates.
Manufacturing, which accounts for 10.3 per cent of the economy, has been squeezed by 525 basis points worth of interest rate hikes from the Federal Reserve since March 2022. The US central bank is expected to leave rates unchanged at the end of a two-day policy meeting next Wednesday. Financial markets anticipate rate cuts will start in June.
Manufacturing output rebounded 0.8pc last month after a downwardly revised 1.1pc drop in the prior month, the Fed said. Factory output was previously reported to have dropped 0.5pc in January, weighed down by frigid temperatures.
Economists polled by Reuters had forecast factory output would rise 0.3pc. Production at factories fell 0.7pc on a year-on-year basis in February. Despite the overall weakness, there remain pockets of manufacturing strength.
Motor vehicle and parts output accelerated 1.8pc last month, the US central bank’s report showed. That followed a 3.8pc weather-induced decline in January.
Durable goods manufacturing production increased 1.0pc. Machinery output rose 1.7pc. There were also big increases in the production of wood products as well as miscellaneous goods. Output of computer and electronic products rose as did that of electrical equipment, appliances and components.
This bodes well for business investment. Production of nondurable goods rose 0.7pc, lifted by the chemicals, printing and support, and paper output categories.
Mild temperatures also boosted mining output, which rebounded 2.2pc after plunging 2.9pc in January. But oil and gas well drilling fell for the fourth straight month. It was down 10.1pc on a year-on-year basis.
Utilities production fell 7.5pc as demand for heating ebbed. That followed a 7.4pc surge in January. Overall industrial production gained 0.1pc in February after falling 0.5pc in January. Industrial production fell 0.2pc on a year-on-year basis in February. Capacity utilization for the industrial sector, a measure of how fully firms are using their resources, was unchanged at 78.3pc.
&uuid=(email))