March 15, 2024

Industrial production rose 0.1% in February after having fallen 0.5% in January.  In the past year industrial production has declined 0.2%.  The manufacturing sector has been essentially unchanged for the past year.

Breaking industrial production down into its three basic categories — manufacturing, mining, and utilities –the Fed reported that manufacturing production jumped 0.8% in February after declining 1.1%% in January.  This series was almost certainly pulled down by the bad weather in January but rebounded sharply in February.  In the past year manufacturing output has declined 0.7%.

In the motor vehicle sector production rose 1.8% in February after falling 3.8% in January.  In the past year motor vehicle production has risen 3,5%.

Excluding the motor vehicle sector, manufacturing output rose 0.8% in February after declining 0.9% in January.  In the past year it has fallen 0.9%.

High tech production rose 0.3% in february after gaining 0.4% in January.  In fact this is thirteenth straight month that high tech production has increased.   High tech production has risen 18.6% in the past year.  We would suggest that if firms are unable to find an adequate supply of workers, and when they can find them the workers demand significantly higher wages, they will turn to technology in an effort to boost production and satisfy the demand for their products.

Mining (14%) output frose 2.2% in February after declining 2.9% in January.   Mining has risen 1.4% in the past year.

Utilities output dropped by 7.5% in February after having jumped 7.4% in January as the brutally cold weather, snow and ice caused electric output to surge in that month.     Over the past year utility output has risen 0.8%.  This component is extremely volatile from month-to-month as the weather fluctuates.

Capacity utilization in the manufacturing sector rose 0.5% in February to 77.0% after having fallen 1.0% in January.   It is currently close to the 77.4% level that is generally regarded as effective full capacity utilization.

GDP appears to be on track to grow at a 2.2% pace in the first and second quarters as firms keep hiring at a relatively rapid pace, the unemployment rate has risen only slightly to 3.9%, and the housing sector begins to edge upwards.  However, we expect GDP to climb by 2.9% in the second half of the year as the Fed begins to ease.

Stephen Slifer

NumberNomics

Charleston, SC