Industrial Production Shows Solid Rise

Industrial production rose a very solid 0.5 percent in March for a 4.3 percent year-on-year rate with mining once again leading the report, jumping 1.0 percent on top of February's 2.9 percent surge to lift year-on-year volumes to a 10.8 percent gain. Utilities also had a good March, with output up 3.0 percent in the month following a 5.0 percent weather-related decline in February. Year-on-year, utility output is up 5.3 percent.

Now the not-so-impressive news. Manufacturing production managed only a 0.1 percent gain which is just short of Econoday's already modest consensus. Year-on-year, production volumes are up only 3.0 percent though there are positive details in the March report. Business equipment output is solid and up 4.4 percent on the year with the selected hi-tech component showing plenty of strength, up 1.2 percent on the month and 8.9 percent on the year. Vehicle production is another positive, up 2.7 in March for an 8.2 percent year-on-year rate that, however, looks aggressive given what have been mostly moderate results for vehicle sales.

Tariffs imposed on steel and aluminum during the month don't appear to have had any measurable effect in this report though they probably didn't help construction supplies where output fell a monthly 0.3 percent. Turning to capacity rates, overall utilization climbed 3 tenths to 78.0 percent but is still short of the nearly 80 percent trend several years ago. But clear stress is evident in mining where capacity is at 90.1 percent. In sum, there are plenty of positives with details helping to offset the headline disappointment for manufacturing production while mining remains one of the economy's top drivers.

Note that traditional non-NAICS numbers for industrial production may differ marginally from NAICS basis figures.