US factory output rises more than forecast in broad advance

[WASHINGTON] US factory production rose in March by more than forecast, marking the third straight month of gains that show steady progress for manufacturers against a backdrop of gradually improving supply chains.

The 0.9 per cent increase followed a 1.2 per cent gain in February, Federal Reserve data showed Friday. Total industrial production, which also includes mining and utility output, also rose 0.9 per cent during the month and the gain in February was revised up. Manufacturing output increased at an annual rate of 5.4 per cent in the first quarter, while total production grew an annualized 8.1 per cent.

Capacity utilisation at factories rose to 78.7 per cent, the highest since 2007, from 78.1 per cent a month earlier. The pickup in the rate, which has climbed almost 18 percentage points since the April 2020 low, shows manufacturers are having more success filling open positions that will allow firms to make progress on backlogs.

Still-firm orders growth, helped by solid business investment, remains a source of strength for domestic producers. A sharp pickup in motor vehicle assemblies shows stresses in supply chains continue to ease. At the same time, soaring materials costs continue to complicate the industrial recovery. Progress on supply chains may also be limited in part by Russia's war in Ukraine and strict pandemic-related lockdowns in parts of China represent new risks.

The pickup in March manufacturing output was broad and included a 7.8 per cent surge in production of motor vehicles. Excluding autos and parts, factory output increased 0.4 per cent.

The report also showed output of business equipment jumped 1.8 per cent in March, matching the prior month's gain, indicating companies still have confidence in the economy's prospects as solid capital spending supports growth. BLOOMBERG