The Federal Reserve Board confirmed what other data points have shown lately: there have been still weaknesses in the manufacturing sector in the first quarter of 2013, even with some signs of progress. Manufacturing production declined 0.1 percent in March. In the first three months of the year, the sector’s output rose just 0.4 percent, with year-over-year growth of 2.5 percent. While this is not much different from the pace at the end of 2012, it does represent a deceleration of activity from one year ago, when the annual pace was 4.8 percent.
Looking specifically at sectors within the manufacturing industry, durable goods production was off 0.1 percent in March, edging slightly lower after growing 1.6 percent in February. Durable goods output has increased 4 percent year-over-year, which was faster than the 1.8 percent growth rate for nondurables.
Nondurable goods production was flat in March. Capacity utilization for manufacturers declined from 76.6 percent to 76.4 percent for the month, with capacity up very modestly so far in 2013 but much-improved from last fall.
Sectors with the declines in production included primary metals (down 2.7 percent), apparel and leather (down 2.5 percent), and electrical equipment and appliances (down 1.4 percent). On the other hand, there were some strengths in the motor vehicle and parts (up 2.9 percent) and printing and support (up 1.1 percent) sectors. The auto industry continues to lead the manufacturing sector with 10.2 percent growth in production over the past 12 months.
Outside of manufacturing, the headline industrial production number reflected some easing. Production was up 0.4 percent in March, down from the 1.1 percent growth rate of February. Increased utility production was the primary source of growth for industrial production in the first quarter of 2013. For the month, utility production rose 5.3 percent, with year-over-year growth of 10.5. Like manufacturing, mining output declined in March, down 0.2 percent.
Chad Moutray is chief economist, National Association of Manufacturers.