Factory Output Exceeds Forecast, Rises Most in Four Months
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Production at U.S. factories rose in February by the most in four months, indicating firmer momentum in a manufacturing sector still challenged by supply constraints and higher costs.
The 1.2% increase followed a revised 0.1% gain in January, Federal Reserve data showed March 17. Total industrial production, which also includes mining and utility output, rose 0.5% last month.
Factories were also able to ramp up capacity after weathering omicron-related challenges in recent months. Capacity utilization at factories rose in February to 78%, the highest since 2018, from 77.1% a month earlier.
February #IndustrialProduction: Total +0.5%, Mfg. +1.2%, Utilities -2.7%, Mining +0.1%; #CapacityUtilization 77.6% https://t.co/nYuGKYaV9g #FedData — Federal Reserve (@federalreserve) March 17, 2022
A steady inflow of orders — a reflection of steady demand from businesses and consumers — remains a source of strength for domestic producers. At the same time, still-fragile global supply chains and soaring materials costs continue to complicate the industrial recovery.
The pickup in manufacturing output was broad-based in February, save for a drop in production of motor vehicles and parts. The Fed said that the 3.5% decline reflected ongoing shortages of electronics components.
Factory production last month was boosted by stronger output of mineral products, wood, aerospace equipment, apparel and furniture.
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The median estimate in a Bloomberg survey of economists called for a 1% monthly advance in factory output and a 0.5% increase in total industrial production.
Total industrial capacity climbed to an almost three-year high of 77.6%.
The latest Institute for Supply Management figures showed stronger factory activity in February on firmer growth in orders and production. The report also highlighted lingering logistical challenges as average lead times for production materials, supplies and capital equipment set record highs.
— With assistance from Kristy Scheuble.
