Manufacturing Production Expanded for the Sixth Straight Month, Continuing to Show Signs of Progress

The Federal Reserve said that manufacturing production expanded for the sixth consecutive month. Output in the sector was up 0.5 percent in February, mirroring the gain seen in January. These data continue to reflect an improving manufacturing sector, with activity turning a corner after struggling for much of the past two years from a number of economic headwinds. Indeed, manufacturing production has increased 1.2 percent over the past 12 months, up from 0.6 percent in the prior report. To put the recent progress in perspective, the year-over-year rate was -0.5 percent just six months ago. The year-over-year number was also the fastest pace since April 2015. Similarly, manufacturing capacity utilization rose from 75.3 percent to 75.6 percent, a 16-month high.

Looking more closely at the February manufacturing data, durable and nondurable goods production increased 0.6 percent and 0.4 percent, respectively. The largest gains included nonmetallic mineral products (up 1.6 percent), paper (up 1.4 percent), plastics and rubber products (up 1.3 percent), fabricated metal products (up 1.2 percent), machinery (up 1.1 percent), miscellaneous durable goods (up 0.9 percent), food, beverage and tobacco products (up 0.8 percent), motor vehicles and parts (up 0.8 percent), printing and support (up 0.8 percent) and computer and electronic products (up 0.7 percent), among others.

On the other hand, electrical equipment and appliances (down 1.5 percent), furniture and related products (down 1.4 percent), textile and products mills (down 1.4 percent), aerospace and other transportation equipment (down 0.3 percent), chemicals (down 0.3 percent) and wood products (down 0.3 percent) each had lower production in February.

Meanwhile, total industrial production was unchanged in February after edging down 0.1 percent in January. The lower figure stemmed largely from a sharp decline in utilities output, down 5.7 percent, likely due to warmer-than-normal winter temperatures. In contrast, mining production increased for the second straight month, up 2.7 percent in February. Over the past 12 months, total industrial production grew 0.3 percent, with mining output up 1.8 percent but utilities production off 7.0 percent year-over-year. Capacity utilization was also lower, down from 75.5 percent to 75.4 percent. For comparison purposes, capacity utilization was 75.6 percent one year ago.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM), where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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