US industrial production up on manufacturing boost

Factory output in the United States increased in March at a rate in line with expectations, as manufacturing and mining logged gains, according to Federal Reserve data released on Tuesday (Apr 16).

Industrial production was up 0.4 per cent in March, holding steady from February’s revised figure, the Fed said in a statement.

In particular, manufacturing output gained 0.5 per cent last month, hovering at 0.8 per cent above the level a year earlier.

This was helped by a 3.1 per cent gain in motor vehicles and parts, said the report.

The index for mining was down 1.4 per cent, while utilities was up 2.0 per cent.

Pantheon Macroeconomics noted there was “little change in manufacturing hours worked and a small fall in railcar shipments.”

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Rubeela Farooqi, chief US economist at High Frequency Economics, added that the manufacturing sector “continues to face headwinds from higher borrowing costs and tighter credit conditions.”

While the Fed has signalled it could start cutting interest rates this year, Farooqi warned that a delay in the reductions could “be a constraint for factory activity in the near term.”

But she expects that lower interest rates subsequently and a build-up of supply networks should help factory activity in 2024. AFP