By ERIC MORATH Updated April 15, 2015 10:08 a.m. ET 0 COMMENTS U.S. industrial output fell in March and posted the first quarterly decline since the recession ended, signs that a retrenching domestic oil industry and stronger dollar are limiting production. Industrial production, which measures the output of manufacturers, utilities and mines, decreased a seasonally adjusted 0.6% from the prior month, the Federal Reserve said Wednesday. For the first quarter of 2015, industrial production declined at an annual rate of 1%. That marks the first quarterly decrease since the second quarter of 2009. The latest figures add “to a growing list of disappointing U.S. economic indicators, suggesting that the economy ended the quarter on a very weak footing,� said TD Securities analyst Millan Mulraine. “Moreover, there is little indication of an impending rebound� to start the second quarter. Capacity utilization, a measure of slack in the industrial sector, fell six-tenths of a percentage point to 78.4%, the Fed report said. At its current level, the measure is 1.7 percentage points below the long run average recorded since 1972. Economists surveyed by The Wall Street Journal had expected a 0.4% decline in industrial production and capacity utilization of 78.6%. February’s industrial production gain of 0.1% was unrevised, but January’s reading was revised to a 0.4% decline from 0.3% fall. Underlying figures showed a deeper decline in manufacturing that month was partially offset by a larger increase in utilities, driven by frigid weather. The decline in industrial production last quarter “resulted from a drop in oil and gas well drilling and servicing,� the Fed said. “And from a decrease in manufacturing production of 1.2%.� Weaker industrial output is consistent with an economy that has been slowing this year. The pace of consumer spending has eased and business investment, especially in the energy sector, has fallen off. As a result, economists project gross domestic product grew at less than a 2% pace in the first quarter. That is a slowdown from the 2.2% pace in the fourth quarter of 2014 and the near 5% growth rate recorded last spring and summer. Output in the manufacturing sector rose 0.1% in March, the Fed report said. That was the first monthly increase since November. But the small gain doesn’t offset recent declines. The March improvement was led by stronger production of long-lasting durable goods, especially cars. Automotive output rose 3% in March. While consumer spending has overall been lackluster, demand for vehicles remains strong. But several other categories posted March declines, including energy products, consumer goods and defense equipment. A stronger dollar and sluggish overseas economies has slowed U.S. exports. Earlier this month, a report from the Institute for Supply Management showed the manufacturing sector continued to expand in March, but a significantly slower pace than February. Wednesday’s report showed mining output, the next-biggest component of industrial production, fell 0.7% last month, the third straight monthly decline. Still, the category is up 3.7% from a year earlier. Utility output decreased 5.9% in March after increasing 5.7% the prior month. The swing reflects a warmer start to spring in much of the country after an unseasonably cold winter.

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