March 15, 2024
Industrial production rose 0.4% in both February and March after having fallen 0.8% in January. In the past year industrial production has been unchanged. 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 rose 0.5% in March after having jumped 1.2% 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 risen 0.8%.
In the motor vehicle sector production jumped 3.1% in March after climbing 3.4% in February after falling 3.8% in January. In the past year motor vehicle production has risen 10,5%.
Excluding the motor vehicle sector, manufacturing output rose 0.3% in March after gaining 1.0% in February after declining 0.9% in January. In the past year it has risen 0.2%.
High tech production rose 0.3% in March after falling 1.1% in February after declining 0.3% in January. After a rapid increase throughout 2023 high tech production has stalled since the end of last year. High tech production has risen 14.1% in the past year but has fallen slightly in the first three months of this 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. Thus, we expect high tech production to continue to climb in the months ahead.
Mining (14%) output fell 1.4% in March after climbing 3.0% in February after plunging 5.1% in January. Mining has fallen 2.0% in the past year.
Utilities output rose 2.0% in March after having dropped by 7.6% in February after having jumped 7.6% in January as winter weather conditions caused the extreme volatility. Over the past year utility output has declined 3.1%. This component is extremely volatile from month-to-month as the weather fluctuates.
Capacity utilization in the manufacturing sector rose 0.3% in March to 77.4% after having risen 0.8% in February/ It is currently at the 77.4% level that is generally regarded as effective full capacity utilization.
GDP appears to be on track to grow at a 2.4% 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
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