Industrial production climbed in March, while manufacturing output dropped unexpectedly: Fed report

Key Points
  • Industrial production rose in March because of a weather-driven surge in utilities generation, the Fed said Tuesday.
  • Factory output, though, fell unexpectedly in March.
  • This was the index's first loss since August 2016.
Industrial production up 0.5% in March

Overall U.S. industrial production rose 0.5 percent in March because of an 8.6 percent weather-driven surge in utilities generation, the Federal Reserve said on Tuesday.

That was the largest increase in utilities output on record, which resulted from heating demand returning to so-called seasonal norms after being suppressed by unusually warm weather in February, the Fed explained.

Economists were expecting an increase in industrial production of 0.5 percent in March, according to a poll by Thomson Reuters.

Factory output, though, fell unexpectedly in March, charting its biggest decline in seven months as auto production contracted in a check on the manufacturing sector's expansion, according to the Fed's latest report.

The group said on Tuesday that manufacturing production dropped 0.4 percent last month. February's output was revised down to show a 0.3 percent gain instead of the previously reported 0.5 percent increase.

The decline in the manufacturing index in March was its first loss since August 2016, and among its major components, only computer and electronic products registered an increase of roughly 1 percent, and motor vehicles and parts recorded the largest decrease of 3 percent, the Fed added.

Just last month, it was announced that U.S. factories cranked out more autos, steel and computers in February, the sixth straight monthly increase in manufacturing output.

Total industrial production rose just 0.1 percent in February from the prior month, but core factory output (ex-motor vehicles and parts) growth had suggested steady improvement in manufacturing activity at the time.

— Reuters contributed to this report.