MNI DATA PREVIEW: US February Industrial Production Seen +0.1%

     WASHINGTON (MNI) - The US industrial production report for February will be

released Friday and the outlook is for a 0.4% rise in industrial production

after a surprise January decline that should not be entirely recovered. Analysts

are expecting an increase to 78.5% in capacity utilization.

     Ahead of the release, we outline important themes for particular attention.

--SOME IP DOWNSIDE RISK

     In the month of February, analysts lean toward overestimating industrial

production, having done so in six out of the last ten years, but a large

underestimate in February 2018 broke a recent string of overestimates,

suggesting only a small leaning toward another overestimate..

--CAP-U SPLIT FORECAST HISTORY

     Based on analysts' history over the last ten years, there is no clear

directional risk to their expectations for capacity utilization to rise to 78.5%

in February. They have overestimated the value five times and underestimated

four times by roughly even magnitudes on average except for a large overestimate

in 2015.

--ISM SUGGESTS DOWNSIDE MFG IP RISK

     The ISM Manufacturing Production Index fell from 60.5 in January to 54.8 in

February, hinting at diminished, but positive manufacturing growth in February,

and a degree of downside risk to the analyst forecast. There was a deviation

between the two series in January, when manufacturing IP fell sharply, but the

ISM manufacturing pull-back in February is still something to consider.

--MINING GAIN QUESTIONABLE

     In January, the Energy Information Administration forecasted record US oil

production in February, but later revised down some of that strength, which

provides some downside forecast risk. Analysts argue that oil output from the

largest rigs increased enough to offset decreases that resulted from weak energy

prices in previous months.

--HARSH FEBRUARY WEATHER TO FUEL UTILITIES

     Cooler-than-normal weather was again a positive factor for utilities

production in February after modest January increase. A February gain would help

lift the year/year rate back from a dip that was exacerbated by a sharp December

plunge.

--MNI Washington Bureau; tel: +1 202-371-2121; email: kevin.kastner@marketnews.com

--MNI Washington Bureau; +1 (973) 494-2611; email: harrison.clarke@marketnews.com

--MNI Washington Bureau; +1 202-371-2121; email: shikha.dave@marketnews.com

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