Industrial production increased at an annual rate of 7.8% in the first quarter, according to a report from the Federal Reserve. For the month production was up 0.1%.
Led by widespread gains among durable goods industries, manufacturing output rose 0.9%. Factory production was likely held down in February by the winter storms but nonetheless rose at an annual rate of 6.6% for the first quarter as a whole, the Federal Reserve said.
Capacity utilization for total industry advanced 0.2 percentage point to 73.2%, a rate 7.4 percentage points below its average from 1972 to 2009, but 3.7 percentage points above the rate from a year earlier.
"The U.S. factory sector continues a seesaw pattern of strong and weak months of production but nonetheless is in the throes of an impressive recovery lead by a powerful inventory swing, fiscal stimulus programs, and an Asian-led export rebound," said Cliff Waldman, Economist for the Manufacturers Alliance/MAPI. "The strong 0.9% gain in manufacturing production in March came disproportionately from durable goods output but was encouraging in that early supply chain industries such as primary and fabricated metals showed strong production gains, and have done so for months now. While consumer goods production was sluggish, it is not surprising that the output of business equipment is powering the manufacturing rebound as the economy recovers from a deep capital spending plunge and as businesses need to replace worn out equipment, at least enough to facilitate the output needs of the massive inventory replenishment that is now occurring.
"The U.S. and global economies still face a number of cross currents that could impact the strength and durability of the manufacturing recovery," he cautioned. "Consumer spending does appear to be accelerating although not to the pace that would be historically normal following such a deep recession. But the difficulties in housing demand and bank lending remain headwinds for the U.S. economy and a stable and steady manufacturing rebound will require a broader global rebound beyond the strength that is emanating from Asia."
