Manufacturing Production Rebounds in February

Chilled by January’s severe weather, manufacturing production returned to more normal levels in February as it moved up 0.8% to 97.2. Industrial production as a whole also strengthened in February by 0.6% to 101.6% of its 2007 level, the Federal Reserve reported.

The gain in factory production in February was the largest since August 2013, the bank noted. It nearly reversed the 0.9% decline in January attributed largely to the effects of winter storms. Manufacturing output was 1.5% higher in February 2014 than in February 2013.

Durable goods production rose 0.9% in February, led by automotive which climbed 4.8%. Machinery and fabricated metal products also posted strong 1.5% gains in output.

Production losses of 1% or more were recorded for wood products, nonmetallic mineral products, primary metals, electrical equipment and components and furniture.

Factory output remains "moderate at best and frustratingly inconsistent," said Cliff Waldman, senior economist with the Manufacturers Alliance for Productivity and Innovation. He said manufacturing industry data associated with construction and housing was "disturbingly weak."

"Furniture manufacturing output contracted by 0.3% in January and then contracted by a much deeper 1.7% in February.  The output of the electrical equipment and appliances sector contracted by 1.6% in January and then contracted by 1.2% in February," Waldman noted. "It would appear that a slowdown in the housing rebound, noticeable even before the winter months, is having an impact on manufacturing, creating a difficult constraint for overall U.S. economic growth."

Capacity utilization for durable goods manufacturing rose 0.5% but still lagged the long-run average of 77.0% by 0.4 percentage points.

Nondurable manufacturing output increased 0.7% in February after a drop of 1.1% in January. Food, beverage and tobacco products, paper, chemicals, and plastics and rubber products all showed gains of about 1% while decreases occurred in textiles, apparel and leather, printing, and petroleum and coal products.

Capacity utilization for nondurable manufacturing rose to 77.6%, but was 3.1% below its long-term average.

Mining output moved up 0.3% in February and stood 6.1% higher than a year earlier. Output from utilities was down 0.2% but was 0.8% above its level in February 2013.