Manufacturing Output Increases 0.4% in February

Over the past 12 months the level of factory production has climbed almost 7%.

While industrial production declined 0.1% in February after having risen 0.3% in January; manufacturing output increased 0.4 percent in February. The gain in January was revised up to 0.9 percent.

Over the past 12 months the level of factory production has climbed almost 7%.

"The factory sector continues to be a primary catalyst for the still shaky economic expansion, although the February data hint at a degree of moderation that is consistent with somewhat slower growth in capital spending and exports," said Cliff Waldman, Economist for the Manufacturers Alliance/MAPI.

"Production activity in key supply chain sectors was weak in February, with machinery output flat and primary metals output contracting by 1.1%," Waldman added.

"Further, the February gains were entirely in durable manufacturing, helped by a powerful automobile replacement cycle that had been delayed by consumer credit bottlenecks, which now finally appear to have cleared. Non-durable manufacturing, by contrast, was flat and there were output declines in food, chemicals, and plastics. The manufacturing sector should continue to be a catalyst for the economic expansion through 2011, although there are challenges to factory sector strength with a still troubled housing market, a slow and uneven recovery in the labor market, and fiscal uncertainties on all levels of government. Global turmoil, generated by social upheavals in the Middle East and devastation in Japan, will likely present difficulties as well. Nonetheless, U.S. manufacturing will continue to benefit from strength in large emerging market economies."

The production of durable goods advanced 0.9% in February, and gains were widespread across its major categories.

The output of motor vehicles and parts rose 4.2% following an increase of 4.5% in January; since December 2010, total motor vehicle assemblies have risen about 1 million units to an annual rate of 8.5 million units.

Sizable gains also were recorded in February in wood products; nonmetallic mineral products; computer and electronic products; electrical equipment, appliances, and components; furniture and related products; and miscellaneous manufacturing.

At 95.5% of its 2007 average, total industrial production was 5.6% above its year-earlier level. The capacity utilization rate for total industry edged down 0.1 percentage point to 76.3%, a rate 4.2 percentage points below its average from 1972 to 2010.

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