Chart of the day: Industrial production hits record in March
REAL ECONOMY BLOG | April 15, 2022
Authored by RSM US LLP
Domestic industrial production increased by 0.9% in March, beating market forecasts despite global supply chain disruptions of key materials. Elevated levels of order backlogs and rising prices of industrial products were behind the increase, combining to give producers the extra boost to increase production.
The index for industrial production volume advanced to 104.59, the highest level in the 100 years of the index, according to the Federal Reserve report on Friday. February’s reading was revised upwardly to 0.9% from 0.5%, making it the third month in a row that production increased by 0.9% or above.
Mining posted the largest gain at 1.7% as higher oil and commodity prices helped to drive up supply. Capacity utilization for mining also led all industry categories at 79.5% on the month. And there is room for mining to improve as its utilization remained below the long-run average.
Manufacturing, which accounts for 75.9% of total production supply in the United States, grew steadily at 0.9% after a sharp 1.2% increase in February.
Domestic auto producers posted the largest increase at 7.8%, followed by machinery at 0.8%. The total number of vehicles produced in March reached 9.75 million, the highest since January last year. But auto production remained subdued compared to pre-pandemic levels as manufacturers continued to face a shortage of chips.
Manufacturing capacity utilization advanced higher on the month, to 78.7%, the only industry that surpassed the long-term average.
Utility production inched up by 0.4% in March after dropping by 1% prior because of seasonal factors, while capacity utilization also picked up slightly, to 75.1%.
The void in global and domestic demand, especially in energy and raw production materials as a result of the war in Ukraine, might have given American producers the opportunities to increase production.
The strong performance of the industrial sector should give gross domestic product growth in the first quarter a needed boost especially with consumption hampered by elevated inflation.
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This article was written by Tuan Nguyen and originally appeared on 2022-04-15.
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