American Industrial production rose in March but factory output declined in another sign that the economy slowed at the end of the first quarter.
Manufacturing production dropped 0.1% as firms curtailed output after the inventory build in January and February. Total industrial production climbed 0.4% but the gain was completely due to a 5.3% gain in electricity usage and a 12.6% jump in natural gas consumption, the biggest in six years, from the coldest March since 2002. February industrial production was revised higher to 1.1% from 0.7%. Economists had forecast a 0.2% increase.
Factory output which makes up 75% of total industrial production but only 12% of overall economic activity is often used by analysts as a leading indicator for the entire economy because of the longer lead times necessary for factory planning and the greater capital commitment required for goods production.
Over the past three years the average monthly gain in industrial production has been 0.31%. The 10 year average is 0.08% a month; the 20 year average is 0.18%; the 30 year average is 0.21%.
Capacity utilization across the nation, which measures the amount of the industrial plant in use, rose to 78.5% in March, a 0.2% gain on the prior month. Economists had predicted a 78.4% rate. February's reading was revised down to 78.3% from 79.6%.
Over the past two years capacity utilization has averaged 77.3%. Historically the 10 year monthly average is 76.9%; the 20 year average is 79.1%; the 30 year average is 79.6%.
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