MW: U.S. industrial output resumes downturn in February
WASHINGTON (MarketWatch) — After hopeful signs of stabilization in January, industrial production decreased 0.5% in February, according to data released by the Federal Reserve on Wednesday.
Output was dragged down by sizable declines in utilities and mining. Manufacturing was up for the second straight month.
Economists polled by MarketWatch had expected a 0.6% fall in industrial output for February. The Fed revised January’s strong gain in output to 0.8%, down a tad from the 0.9% gain initially estimated.
This is the fourth decline in total output over the past five months. Over the past year, industrial output is down 1%.
Manufacturing rose 0.2% in February, softer than the 0.5% gain in January. Output of motor vehicles and parts slipped 0.1% after a 3.4% gain in January.
Capacity utilization fell to 76.7% in February from 77.1%, in line with expectations.
Industrial output has been hurt by the sharp drop in oil prices, the strong dollar, and weak global demand.
Before the report was released, Ellen Zentner, an economist at Morgan Stanley, said the U.S. industrial sector was in a recession.
‘”It ticks off all the boxes” of the definition of a recession, Zentner said in an interview on Bloomberg Radio, listing a 2% drop from its peak and weakness over the past six months. She wasn't available for immediate comment after the data were released.
See: U.S. manufacturing teeters on edge of recession
Other economists are quick to point out that output in the manufacturing sector has been relatively strong, rising 1.8% year-over-year.
Mining fell 1.4% in February after a 0.7% drop in the prior month. This sector has been the hardest hit by weak energy prices.
Utilities dropped 4% in February, retracing most of January’s 4.2% increase as mild weather brought about a reduction in electricity output.
