Manufacturers see production decline

Production at U.S. manufacturers unexpectedly declined in February, representing a pause in recent momentum as factories were beset by severe winter weather and supply chain challenges.

The 3.1 percent decrease in output was the first since April and followed an upwardly revised 1.2 percent gain in January, according to Federal Reserve data Tuesday that compared with economists’ estimates for a 0.2 percent rise. Excluding the effects of inclement weather, factory production would have fallen about 0.5 percent in February, the Fed said in a statement.

Total industrial production, which also includes mines and utilities, dropped 2.2 percent in February after an upwardly revised 1.1 percent increase a month earlier.

Total industrial output reflected a 7.4 percent surge at utilities, driven by increased demand for heating because of bitter cold weather that also resulted in blackouts in Texas and disrupted production at refineries.

While manufacturers continue to battle supply shortages and shipping challenges, tailwinds for producers include lean business inventories, steady demand from consumers and solid capital spending.

The Fed’s index of manufacturing output is 4 percent below where it was a year ago.

Auto production slumped 8.3 percent in February, reflecting both a global shortage of semiconductors and the severe weather, reducing overall manufacturing output about 0.5 percent.