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--5 Things We Learned From Industrial Production Data
By Sara Haire and Holly Stokes
WASHINGTON (MNI) - The following are the key points from the
Industrial Production and Capacity Utilization data for February
released by the Federal Reserve Friday:
- Industrial production came in much stronger than the +0.4%
expected, surging up to 1.1%, and the strongest gain since
post-hurricane fueled October's 1.6% gain. The two months prior had
mixed strength, with January IP revised down to a 0.3% decline but
December revised up to a 0.5% gain.
- With February's abnormally warm weather, utilities was the one
drag to IP, falling 4.7%. While this was a large decline it should be of
little surprise, as it follows the trend between electric and gas
utilties in IP and PPI home heating oil, as previewed by MNI's 5 Things.
- Manufacturing provided a boost, jumping 1.2% from January's 0.2%
decline. The print follows the 0.5% surge in manufacturing hours worked
reported in February's already released Employment Situation report.
Interestingly this was the largest month/month gain for manufacturing
hours since October 2017, when IP manufacturing posted a similar 1.3%
rise - so today's print follows this trend closely.
- Capacity utilization came in at 78.1%, above the 77.8% expected,
and breaking analysts' trend of overestimating February capacity
utilization. This slightly larger print indicates a decline of economic
slack, and is the highest reading since January 2015. However, it is
still 1.7% below its long-run average.
- Mining surged 4.3% after January's revised down 1.5% decline.
Analysts were surprised by January's fall last month as rig counts had
climbed, but the rebound should set minds at ease. The Fed noted that
the strength in February's print reflected strength in oil and gas
sector and in coal mining.