Quality Magazine

Manufacturing Output Up in March

April 16, 2010

WASHINGTON (From the Associated Press)-Output at America's factories, mines and utilities edged up 0.1% in March, but the overall figure was held back by a temporary decline in utility output related to warmer weather.

By contrast, increases in factory production and mining offered the latest signs that the economy is recovering.

Manufacturing rose 0.9% and mining 2.3%, the Federal Reserve reported Thursday. The jump in factory production was an improvement from the 0.2% increase in February, when snowstorms hit the East Coast and restrained production.

Those gains were nearly offset in March by a 6.4% drop in utility output. Winter storms in February boosted output at utilities while dampening it at factories. But March's above-average temperatures reduced demand for heat.

The modest overall gain is lower than February's 0.3% increase, revised up from the 0.1% reported earlier. All the figures from the previous four months were revised upward, making March's increase the smallest since October.

The gains show a slow but steady upswing in the activity at factories, utilities and mines. It was the ninth straight monthly increase. The index's consistent gains suggest the economic recovery is durable.

The nation's industries were operating at 73.2% of full capacity-a 0.2% increase from February but still 7.4 percentage points below the average since 1972.

Economists mostly cheered the results, noting manufacturing's return to strength. Manufacturing has been a rare bright spot amid the sluggish economy. Its growth is considered crucial to recovery.

The "seesaw pattern" of good and bad months for manufacturing reflects a normal ebb and flow, as businesses draw down inventories then restock, said Cliff Waldman, economist with the Manufacturers Alliance/MAPI.

But Waldman said the factory sector is "in the throes of an impressive economic recovery" thanks to the Obama administration's stimulus programs and a rebound in exports to Asia and elsewhere.

March also marked the third straight month of increased activity in mines-the longest uptick streak in four years.