Manufacturing output takes surprise dip in February

Industrial production up 0.1% in February
Industrial production up 0.1% in February

U.S. manufacturing output fell in February for the third straight month as automobile production tumbled, pointing to slower economic growth in the first quarter.

Factory production slipped 0.2 percent last month after a revised 0.3 percent decline in January, the Federal Reserve said on Monday. Auto production fell 3.0 percent last month.

Economists polled by Reuters had forecast that manufacturing output would edge up 0.1 percent in February after a previously reported 0.2 percent gain in January.

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Mining output dropped 0.2 percent last month, primarily due to declines in the coal, oil and gas well drilling, and servicing sectors.

Utilities production jumped 7.3 percent as a cold snap boosted demand for heating.

The rise in utilities, however, was insufficient to offset the drag from manufacturing and mining, leaving overall industrial production gaining only 0.1 percent in January.

The amount of manufacturing capacity in use slipped to 77.3 percent last month from 77.6 percent in January.

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Overall industrial capacity use dipped to 78.9 percent from 79.1 percent.

Officials at the Fed tend to look at capacity use as a signal of how much "slack" remains in the economy and how much room there is for growth to accelerate before it becomes inflationary.