Economist's Insights

Industrial, Manufacturing Output Move in Different Directions in March

Apr 18, 2017

Industrial output was the strongest of the year in March (in line with expectations) despite the biggest drop-off (worse than expected) in manufacturing output since last August. In addition to the 0.4% decline in manufacturing, the results for January and February were both revised down 0.2%; to +0.4% and +0.3%, respectively. While disappointing, a breather for the manufacturing sector isn’t too surprising as the output index had risen for six consecutive months through February; the longest string of gains since 2011. Capacity utilization ticked up from 75.7% to 76.1%, the highest since October 2015. In the face of weaker manufacturing results, the headline industrial output result was buoyed by surging utilities output. Utilities output rose 8.7% in March, the biggest monthly gain on records that reach back to 1972. Swings in utilities output are generally weather-driven and the big March gain followed a record-warm February and a string of notably weak reports over the last six months. Mining was essentially unchanged.