U.S. industrial production declined in March
Continued weakness in output aligns with gloomy global outlook for manufacturing
U.S. industrial output faltered in March, a signal a slowing global economy is putting pressure on the U.S. manufacturing sector. Industrial production—a measure of output at factories, mines and utilities—fell a seasonally adjusted 0.1% in March from the prior month, the Federal Reserve said Tuesday. Economists surveyed by The Wall Street Journal had expected the index to rise 0.2%.
From a year earlier, industrial production rose 2.8% in March.
Manufacturing output, the biggest component of industrial production, was flat in March after declining in the first two months of the year. For the first quarter as a whole, manufacturing output declined at an annual rate of 1.1%, the first drop since output fell 1.6% in the third quarter of 2017. The continued weakness in output aligns with a gloomy global outlook for the manufacturing sector.
The International Monetary Fund, in its world economic outlook report last week, attributed the recent industrialproduction slowdown across many countries to global trade tensions. The IMF sees continued pullback this year, based on purchasing managers’ indexes, which measure manufacturing conditions.
The J.P. Morgan global manufacturing PMI flashed further signs of slowdown in March. Europe’s manufacturing sector appears to be particularly hard hit by trade frictions. The IHS Markit PMI index for the eurozone logged the biggest fall in output in nearly six years in March. Germany, which relies relatively more on exports to drive growth than other large economies, saw its PMI decline in March to near a seven-year low. Tuesday’s manufacturing data show the U.S. might not be resistant to a sharp, long-lasting slowdown in light of a pullback in global growth and a relatively strong U.S. dollar that makes exports more expensive.
Capacity use, a measure of slack in the industrial economy, decreased 0.2 percentage point to 78.8% in March. Economists had expected capacity utilization of 79.2% in March.
Tuesday’s report showed output in the volatile mining sector declined in March. The mining index, which includes oil and natural gas extraction, was still up 10.5% from a year earlier.
Utility output edged up from the prior month and was up 3.8% from a year earlier.