Overdue bounce in autos gives one-off boost to industrial production
Summary
Despite tariff uncertainty, an overdue bounce in auto manufacturing lifted manufacturing output by the most in a year in February. We do not see this as a sustainable driver of production and remain cautious on prospects for a continued recovery until the dust settles on trade policy.
A big lift from a long-suffering sector
On the surface, today's industrial production report was largely better than expected, though trade uncertainty and one-off dynamics disrupt rational efforts to make definitive takeaways. Start with the headline increase of 0.7% for overall industrial production in February. That is a far better outcome than the 0.2% gain that had been expected by the Bloomberg consensus and, while a downward revision to January's production numbers cools the soup a bit, the production numbers are still plenty hot. Attribute a big step up in manufacturing activity for that. Manufacturing output rose 0.9%, the biggest sequential gain in twelve months, as a big 8.5% increase in motor vehicle & parts production lifted the sector after back-to-back declines in the prior-two months.
Author
Wells Fargo Research Team
Wells Fargo
