Industrial production rose more than forecast in March 2014 after a big February gain, indicating U.S. factories are recovering after a tough, weather-depressed start to the year. Orders for new manufacturing technology orders were up over 40% for the first two months of the year in the Northeast, as compared with last year. Capacity utilization continues to trend upward, providing support for manufacturing expansion in 2014.
The Fed’s report on industrial production measured an increase of 0.7% in March after having advanced 1.2% percent in February. For the first quarter, industrial production grew at an annual rate of 4.4% percent. Within that, industrial and other equipment rose at an annual rate of 7.9%. Capacity utilization for total industry increased 79.2%, a rate that is 0.9% below its long-run average but 1.2% higher than a year prior. Both figures were stronger than forecasts. Economists surveyed by The Wall Street Journal, for example, expected a 0.4% increase for industrial production and a utilization rate of 78.7%.
Manufacturing technology orders on the rise
The figures show manufacturing is strengthening after unusually cold weather hit many sectors of the economy in December and January. For manufacturers, freezing temperatures, icy roads and storms kept workers at home and delayed shipments and production. The New England region, even at the end of a long winter, is demonstrating growth in industrial equipment spending. For example, the recent United States Manufacturing Technology Orders (USMTO) report measured over $140 million of metal cutting machines ordered in the Northeast during January and February. In the Northeast region, new manufacturing technology orders totaled $64 million in February, rising 14.3% over February 2013. The region’s year-to-date orders were 41.8% higher than during the first two months of 2013, a significant increase in spending on long-lived manufacturing assets.