The Federal Reserve Board reported that industrial production rose 1.1 percent in April, its fastest pace since December 2010. After falling in March by 0.6 percent, this represents a healthy turnaround. The numbers were lifted by strong showings in the utilities and mining industries, which were up 4.5 percent and 1.6 percent. Overall capacity utilization for all industries has risen to 79.2 percent, its highest level since the spring of 2008.
Manufacturing production increased 0.6 percent, aided by a 1.3 percent rise in durable goods production. Nondurable goods manufacturers experienced a 0.2 percent decline in production in April. Manufacturers have produced 5.8 percent more on a year-over-year basis. Meanwhile, manufacturers’ capacity utilization increased to 77.9 percent, essentially on par with the February reading of 78 percent.
Motor vehicle sales were the largest bright spot in the manufacturing sector, with production up 3.9 percent in April. This continues a steady gain for the auto sector, which has seen a 27.1 percent increase in activity since April 2011. Other sectors with higher production in April include furniture and related products (up 2.4 percent), computer and electronic products (up 1.6 percent), miscellaneous durables (up 1.5 percent) and aerospace (up 1.1 percent).
The largest declines were seen in petroleum and coal products (down 2.6 percent) and wood products (down 1.4 percent). In each case, though, the year-over-year production numbers were higher for 16 of the 19 major manufacturing sectors. Those lagging in production over the past 12 months include the printing and support, paper and apparel and leather sectors.
These numbers show that industrial production remains strong, with mining and utilities helping to lift the overall figures. Manufacturing production has risen by nearly 6 percent over the past year, and healthy gains in the automotive, aerospace, machinery and metals sectors have been a large reason for this gain. Moving forward, manufacturers remain cautiously optimistic about production for the rest of 2012, even as they are aware of the many headwinds around them.
The April production figures also reflect a bounce-back from declines in activity in March. As we have seen with a number of other indicators, the previous month’s fall was likely due to both seasonal adjustment factors as well as a reaction on the part of the public to rising energy costs and increased uncertainties in the global economy. April’s readings suggest that we have now started to move beyond those issues, at least for the time being.
Chad Moutray is chief economist, National Association of Manufacturers.
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