Industrial production plunged 0.6 percent in March even as manufacturing production inched up 0.1 percent. Most of the drop was a reversal in the production of utilities. Mining output also contributed to the decline.
Mining output was also lower in March, as the unwinding of the oil sector continued. March saw the third consecutive drop in mining output down 0.7 percent, compared to a drop of 1.6 percent in February and a decline of 1.7 percent in January.
All of the increase in manufacturing production was due to a 3.2 percent increase in motor vehicles & parts production. Excluding motor vehicles & parts, manufacturing production dropped 0.1 percent. Motor vehicle & parts production had dropped 3.6 percent in February. Furthermore, manufacturing production of machinery and computers and electronics remained flat during the month. In February, these two sectors grew 1.6 percent and 0.1 percent, respectively.
The bad news was that manufacturing production during the first quarter of the year was weaker than most were expecting, as January’s manufacturing production, which was originally estimated to have dropped 0.3 percent, was revised down to a decrease of 0.6 percent. The good news is that manufacturing production increased in March for the first time since November 2014.
However, the good news in manufacturing stops there, as it is clear that the sector remains weak by looking at output by final products. Output of consumer goods dropped 0.6 percent after a similar increase in February, with home electronics production falling 0.7 percent. Furthermore, defense and space, construction supplies and business supplies were also down during the month. Meanwhile, materials production was down 0.5 percent mainly due to a 0.9 decline in energy output. The only sector of final products that saw an improvement in March was business equipment, which increased 0.2 percent. Thus, although manufacturing inched up in March, the sector’s performance remains soft and looks likely to remain under pressure in the months to come.
Weather and Oil Main Reasons for the Decline
As a cold February was followed by a warm March, utilities production swung from a strong positive to a strong negative. After increasing 5.7 percent in February, the production of utilities dropped 5.9 percent in March, more than reversing the previous month’s increase. The largest drops within utilities were a 9.8 percent drop in natural gas and a 5.3 percent drop in electricity, after both increased in February by 7.6 percent and 5.4 percent, respectively.Mining output was also lower in March, as the unwinding of the oil sector continued. March saw the third consecutive drop in mining output down 0.7 percent, compared to a drop of 1.6 percent in February and a decline of 1.7 percent in January.
Manufacturing Production Up in March, But Still Weak
Meanwhile, manufacturing production saw an increase of only 0.1 percent in March, following a 0.2 percent decline in February, which means that it was not able to reverse February’s drop.All of the increase in manufacturing production was due to a 3.2 percent increase in motor vehicles & parts production. Excluding motor vehicles & parts, manufacturing production dropped 0.1 percent. Motor vehicle & parts production had dropped 3.6 percent in February. Furthermore, manufacturing production of machinery and computers and electronics remained flat during the month. In February, these two sectors grew 1.6 percent and 0.1 percent, respectively.
The bad news was that manufacturing production during the first quarter of the year was weaker than most were expecting, as January’s manufacturing production, which was originally estimated to have dropped 0.3 percent, was revised down to a decrease of 0.6 percent. The good news is that manufacturing production increased in March for the first time since November 2014.
However, the good news in manufacturing stops there, as it is clear that the sector remains weak by looking at output by final products. Output of consumer goods dropped 0.6 percent after a similar increase in February, with home electronics production falling 0.7 percent. Furthermore, defense and space, construction supplies and business supplies were also down during the month. Meanwhile, materials production was down 0.5 percent mainly due to a 0.9 decline in energy output. The only sector of final products that saw an improvement in March was business equipment, which increased 0.2 percent. Thus, although manufacturing inched up in March, the sector’s performance remains soft and looks likely to remain under pressure in the months to come.
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