Manufacturing Weighs on February Industrial Production

Wells Fargo Research Team Wells Fargo

The 0.4% decline in February manufacturing output held back a more pronounced gain in industrial production. With a weak global backdrop, the outlook for manufacturing activity remains under pressure.

Manufacturing Activity Remains Weak

Industrial production rose a modest 0.1% in February. This followed a decline in January, which was entirely due to weakness in manufacturing. This core weakness remained in February, as manufacturing output fell 0.4%.
The Fed is no doubt watching the two consecutive declines in manufacturing. At the very least, this release reaffirms their patient stance on further policy tightening.

Utilities & Mining Up

In a separate release this morning, we learned that the NY Fed's Empire Index fell to 3.7 in March, suggesting a near-term rebound in manufacturing activity remains limited.
Gains were evident elsewhere in the release. Cold weather across much of the country in February drove utilities output higher (up 3.7%), while mining output rose a more modest 0.3%. Despite these gains, the core trend in industrial output remains weak.

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Wells Fargo Research Team

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