Industrial production in the U.S. unexpectedly came in unchanged for the second consecutive month in March, according to a report released by the Federal Reserve on Tuesday, with a drop in manufacturing output offsetting a notable increase in utilities output.
The report showed that industrial production remained unchanged in March after coming in flat in February. Economists had been expecting production to increase by about 0.3 percent.
After seeing notable growth over the past few months, manufacturing output edged down by 0.2 percent in March. The modest drop came after manufacturing output rose by an upwardly revised 0.8 percent in February.
Despite the monthly drop, the Fed noted that manufacturing output rose by an annual rate of 10.4 percent in the first quarter. Excluding a nearly 40 percent jump in the production of motor vehicles and parts, manufacturing output till rose by an annual rate of 8.3 percent in the quarter.
Offsetting the monthly drop in manufacturing output, utilities output surged up by 1.5 percent in March after edging up by 0.1 percent in February.
However, utilities output in the first quarter fell by an annual rate of 13.8 percent due to the unseasonably warm temperatures seen over the past several months.
The report also showed that the output of mines inched up by 0.2 percent in March after tumbling by 4.0 percent in February.
Rob Carnell, chief international economist at ING, said, "Whilst this data raises the chances of some disappointment in 1Q12 GDP, we don't believe it undermines the notion of gradual recovery in the U.S., including gradual improvements in the labor market."
"The likelihood is that declining productivity growth will require more labor demand in this pick up than many of the Okun's law calculations that are being thrown around, or that seem to underpin the Federal Reserve's skepticism about further declines in the unemployment rate."
Meanwhile, the Fed said capacity utilization edged down to 78.6 percent in March from 78.7 percent in February. The capacity utilization rate matched economist estimates.
While the capacity utilization rate in the manufacturing sector slipped 77.8 percent from 78.0 percent, the capacity utilization rate in the mining sector crept up 87.5 percent from 87.4 percent and the capacity utilization rate in the utilities sector rose to 73.1 percent from 72.2 percent.
by RTT Staff Writer
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